APY vs Interest Rate - What's The Difference? (How Are They Calculated?) скачать в хорошем качестве

APY vs Interest Rate - What's The Difference? (How Are They Calculated?)

APY vs Interest Rate - What's The Difference? (How Are They Calculated?). In this comparison video I will talk about APY vs Interest Rate. So, the main difference between them is the interest terms. Interest rate is the overall percentage of interest on your loan, investment, or savings account. It's what you pay when borrowing money or earns when loaning your cash. On the other hand, annual percentage yield (APY) is the percentage of interest you earn and the rate at which it accumulates when you keep money in your savings account or certificate of deposit for a year. This means your interest will earn interest. Therefore, APY terms are favorable as they account for compound interest. Calculation and representation Interest rates show your potential earnings without considering compounding. It's calculated using this formula: Interest = Principal x Rate x Time, where Principal is your initial deposit, Rate is the interest rate, and Time is the duration. For example, if you lend $20,000 at 2% interest, you earn $400 annually ($20,000 x 2 / 100 = $400). On the other hand, Annual Percentage Yield (APY) considers compounding. It's calculated as APY = (1 + r/n)^n - 1, where r is the yearly interest rate and n is the number of times interest is being compounded. For instance, with a $20,000 deposit and 2% APY compounded monthly, APY = (1 + 0.02/12)^12 - 1 = 0.020 or 2.02%. So, your total balance after a year would be $20,404. Therefore, APY terms provide a proper presentation of your potential earnings. But do they have any similarities? Yes. Both APY and Interest rates are terms presenting your potential earnings or returns from a savings account, investment, or loan. To sum up, how do they compare - APY or Interest rates? I like interest rate terms since when opting for loans with lower rates, I end up paying lower interest throughout the lifespan of the loan. However, I like APY terms more because they provide higher interest rates, and the compounding factor makes it possible for me to maximize my earnings. For these reasons, APY is the overall winner. If you found this tutorial helpful, kindly show your support by giving it a thumbs up and sharing your thoughts in the comments below. Your feedback is greatly appreciated. Thank you! ►Disclaimer◄ This channel DOES NOT promote or encourages any illegal or unethical activities and all content provided by this channel is meant for EDUCATIONAL PURPOSES only. This video is solely intended for educational purposes only. The information presented has been thoroughly researched and sourced from reputable outlets, including, but not limited to, Google, social media platforms, and online forums. Our team has meticulously crafted original content centered around this topic, utilizing a comprehensive approach to ensure accuracy and reliability. The Savvy Professor is a YouTube channel that provides up-to-date information on various topics, ranging from finance ,technology ,gaming, how-to tutorials, product reviews, and roundups. Our channel is dedicated to delivering informative, original, and unbiased content that viewers can appreciate. I believe all content used falls under the remits of Fair Use, but if any content owners would like to dispute this I will not hesitate to immediately remove said content. It is not my intention to in any way infringe on their content ownership. If you happen to find your art or images in the video please let me know and I will be glad to credit you / Take down the content. Business e-mail: juicewave23 { @ } gmail.com ................................. Content Credit : The visual content featured in this video has been obtained from reputable sources, including Google Images, official websites, and stock footage clips. Furthermore, the information presented in this video has been derived from various reliable data sources, such as Wikipedia, Google search, Forums and other social media platforms. The video has been professionally edited using a combination of Adobe Premiere and Adobe After Effects, to create original content thats is engaging for our viewers. ..................................... FTC Disclosure: The Savvy Professor is a participant of Amazon Affiliate Program. Provided Amazon product links are linked to my Amazon Affiliate account & I receive small commissions from every successful purchase made using these links.