People mix up APY and APR constantly. The fix is a one-line rule:
- APY = what you earn on deposits (with compounding baked in)
- APR = what you pay to borrow (card, loan, mortgage), usually without daily compounding complexity called out the same way
Savings: use APY
Deposit accounts advertise APY so you can compare banks. If one HYSA shows 4.20% APY and another shows 4.05% APY with the same fees and insurance, the first pays more on the same balance. Details: What is APY.
Credit cards: use APR (and the intro window)
Card APRs are almost always variable and tied to the prime rate. Marketing also shows intro APR periods (for example 0% for 15 months). The right questions:
- Is 0% on purchases, balance transfers, or both?
- Is there a balance transfer fee (often 3% to 5%)?
- What is the go-to rate after the intro ends?
- Can you clear the balance before the window closes?
If you revolve a balance, rewards are usually worthless next to interest. A 2% cash back card at 22% APR is not a savings product.
Mortgages: APR can include more than the note rate
Mortgage shopping often shows both a note rate and an APR. APR may fold in certain upfront fees so you can compare lender quotes. Freddie Mac’s weekly averages (see our mortgage rates page) are market thermometers, not your personal quote.
Worked comparison: wrong number, wrong choice
You see:
- Savings account A: 4.00% APR compounded daily
- Savings account B: 4.05% APY
If you pick A because “4.00 is almost 4.05,” you may still be fine, but you compared mismatched labels. Convert everything to APY (or use the bank’s APY quote) before you decide.
Bottom line
Match the metric to the product. Earn side: APY. Borrow side: APR plus fees and promo windows. Our rates hub keeps deposit APYs and mortgage averages on separate pages so the labels stay honest.