APR vs APY Explained: The Rate You Actually Earn

TITLE APR vs APY Explained: The Rate You Actually Earn DESCRIPTION Two banks, same window. Bank A pays 5%, compounded monthly. Bank B pays 5.1%, compounded once a year. The bigger sign looks like the better deal — but it isn't. In this Mini Lesson we take $1,000, run it through the compound interest formula A = P(1 + r/n)^(nt) for one year — typed into the calculator in one entry, rounded once at the end — and land on exactly $1,051.16, a real rate of 5.116%. That honest number has a name: APY, the Annual Percentage Yield, and it's how you actually compare offers. Bank A's 5.116% quietly beats Bank B's 5.1%, even though its sign shows the smaller number. The advertised rate is the recipe; the APY is what comes out of the oven — and every real bank prints it in the fine print. No prerequisites, just everyday numbers. [PLAYLIST LINK] #math #learnmath #interest #APY ORBITAL — Watch it click.

Added 23 Jul 2026