For loans (including private student loans), student credit cards or investments that involve compounding interest, there are two popular interest rate related terms.
Annual Percentage Rate, or APR, is a measure of how much interest will be on an annual basis without taking into account compound interest.
Annual Percentage Yield, or APY, is the same interest rate measure, but accounts for compound interest – a better measure of how much you will actually pay in interest. Banks and credit card issuers often express credit card interest rates in APR, in order to better hide just how much interest would cost.
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