What's the difference between APR (annual precentage rate) and APY(annual precentage yield)?

Question

Bank rates talk about apr and apy. I have a CD with an apr of 4.65% and a 4.75% apy. Which precentage am I making?

Answer 1

APR is the RATE they're paying you annually. APY is the annual yield--it's what you actually MAKE in a year when compounding is taken into account. That's why the APY will be more than the APR. Hope that helps!