system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: What is the difference between annual percentage return (APR) and annual percentage yield (APY)?

How does APR and APY affect interest rate calculation?
gpt
APR is the percentage return on your money, and yield shows the actual amount your money will increase in a year, based on how often the APR is calculated.

For example, say your savings account pays 12% per annum, calculated monthly.  You invest $10,000 on January 1, 2022.  On January 31 (approximately) they add interest of 1%, so you have $10,100.  On February 28 (approximately) they calculate interest again, only this time you make 1% on $10,100 — making interest on your interest — so they add $101 rather than $100.  And so on, like this:

Month - Interest - Balance
Jan $100.00 $10,100.00
Feb $101.00 $10,201.00
Mar $102.01 $10,303.01
Apr $103.03 $10,406.04
May $104.06 $10,510.10
Jun $105.10 $10,615.20
Jul $106.15 $10,721.35
Aug $107.21 $10,828.56
Sep $108.29 $10,936.85
Oct $109.37 $11,046.22
Nov $110.46 $11,156.68
Dec $111.57 $11,268.25

So the stated APR of 12% implies that in a year you would make $1,200 in interest, but with monthly compounding you actually made $1,268.25, which means there’s an annual yield of 12.682%.