Adding Percentages Excel
Banks and other financial institutions will usually show the APR for a loan or credit card. For savings accounts and CDs, the banks will usually show the APY. Why the difference? The reason is that the APR rate is a lower percentage than the APY rate. A lower percentage rate looks better for loans, whereas a higher percentage rate looks better for a savings account.
What is an APR Rate?
APR or annual percentage rate is listed as the actual rate in a 12 month period. For example, if a loan for $10,000 has an annual percentage rate of 12%, the interest in a 12-month period would be $1,200. The only problem is that many loans, especially credit cards, are calculated monthly and not annually. With a percentage rate that’s calculated monthly, the actual interest rate paid annually is more than the stated APR. This is where the APY comes into play.
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