What is the difference between APR and APY?
In this article, we talk about the difference between APR, and APY and why it’s important for you to understand it. We also provide you with a calculator, so you are able to estimate your yield as accurately as possible.
APR – Annual Percentage Rate
The annual percentage rate is the annual interest expressed as a percentage. It only takes simple interest into account and does not include a reinvestment of the interest earned (compounding). In order to obtain a higher yield you could reinvest your interest consequently, this would lead to a compound interest and therefore APY.
APY – Annual Percentage Yield
The annual percentage yield is the annual interest expressed as a percentage, but with a consequently reinvestment of your earned interest (compounding) taken into account. The compounding interest leads to a higher annual yield.
APR to APY
APR can be calculated down to monthly, daily, or hourly rate of interest, by dividing it by the given time period. However, this is not possible with APY because of the compounding interest, since it leads to an exponential growth. To make calculations easier, you can use an APR to APY calculator.
GrizzlyFi’s Auto Compounding
At Grizzly we optimize your yield in the best way possible, with the least effort on your side. To maximize profits, we compound your interest. The best thing about it, is you don’t have to do it manually. We provide you with an automated solution to harvest the most. Therefore, our yields are displayed in APY.
Now you know the difference between APR and APY and can apprehend how the yields in our hives are assembled.