Thread by @the_coopa

Just cuz it kicked my ass, don't mean it gotta kick yours!

Here's Interest Rate vs. APR vs. APY 🤔📊👇🏽

#30DaysofThreads

Interest Rate:

This is the amount of interest that you will PAY only* on the principal (starting amount) of the loan

Usually shown as a percentage (ex. 5%)

APR (Annual Percentage Rate):

This is the interest rate PLUS other fees that might come with the loan (ex. appraisal fee, broker fees, etc..)

Video from BankRate likes to say "APR = Additional Prices Represented"

APY (Annual Percentage Yield):

This is generally the money you MAKE in interest from a bank account/savings account

Such as on a high yield savings account (HYSA) they might give you 1.50% on the amount you have in the account

There are equations to calculate these but I think that's out of the scope for this but found something interesting on Reddit from a user Sleepyguy22

👆🏽 Basically:

APY is higher so they use that rate when it's talking about GIVING money to YOU

APR is lower so they use that rate when it's talking about them TAKING money from YOU

It's all marketing and psychology

I hope this all helped cuz I tried to keep it a basic explanation buut

If there's any questions just hmu or dive into Google and see what you learn!