What are the differences between APR and APY when it comes to earning interest on cryptocurrencies?

3 answers

• Dec 15, 2021 · 3 years ago
  APR and APY are both important measures when it comes to earning interest on cryptocurrencies. APR stands for Annual Percentage Rate, which represents the annualized interest rate without taking compounding into account. On the other hand, APY stands for Annual Percentage Yield, which considers the effect of compounding on the interest earned. In simple terms, APR is the nominal interest rate, while APY is the effective interest rate. When it comes to earning interest on cryptocurrencies, it's crucial to understand the difference between APR and APY to accurately assess the potential returns on your investments.
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• Dec 15, 2021 · 3 years ago
  APR and APY are like two sides of the same coin when it comes to earning interest on cryptocurrencies. While APR gives you the basic interest rate, APY takes into account the compounding effect, which can significantly impact your overall returns. Let's say you have a cryptocurrency investment with an APR of 5%. If the interest is compounded monthly, the APY will be higher than 5% due to the compounding effect. So, if you're looking to maximize your earnings on cryptocurrencies, it's essential to pay attention to both APR and APY and choose investments with higher APYs.
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• Dec 15, 2021 · 3 years ago
  When it comes to earning interest on cryptocurrencies, understanding the difference between APR and APY is crucial. APR, or Annual Percentage Rate, is the simple interest rate that does not take into account compounding. It is the nominal rate that is advertised by many platforms. On the other hand, APY, or Annual Percentage Yield, takes into account the compounding effect and provides a more accurate representation of the actual interest earned. To put it simply, APR is the base rate, while APY is the rate that considers the effect of compounding. So, when comparing different investment options, it's important to look at the APY rather than just the APR to get a better understanding of the potential returns.
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