apy (annual percentage yield) is the annual rate of return on an investment, including compound interest. apr (annual percentage rate) is the annual interest rate charged on a loan or credit card, without taking into account any compound interest. apy takes into account the effects of compounding, whereas apr does not. this means that the apy will always be higher than the apr, as it reflects the total amount of interest earned over the course of a year, including any interest earned on previous interest. for example, if you have a savings account with a 1% interest rate and monthly compounding, the apy would be 1.01^12-1