APR and APY are not the same number

Two accounts paying the same nominal rate can credit different amounts of money over a year, purely because of how often interest is added. That is the whole reason two acronyms exist.

APR

The annual percentage rate standardises the cost of credit so that products can be compared. In consumer lending it is required to fold in certain mandatory fees alongside interest, which is why an advertised APR can exceed the headline interest rate on the same loan.

APY and AER

The annual percentage yield — the AER in UK usage — states what a balance earns over a year once interest compounds at the stated frequency. Monthly compounding produces a slightly higher APY than the nominal rate; the difference widens as rates rise.

Where the quoted figure misleads

Introductory savings rates that include a temporary bonus, and loan APRs described as 'representative' — offered to only a proportion of accepted applicants — are both legitimate and both easy to misread. The binding number is the one in your own offer document.