word choice What is the difference between «Per year» and «Per annum»? English Language & Usage Stack Exchange

This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional. Its meaning in English has not really diverged at all, so it is basically just a snooty (or jargonistic) way to say year. Fewer people know the word, so it is probably a good word to use if you are trying to bury the truth of something under a blanket of obscure verbiage. Per annum is used in financial contexts to mean for each year. As kiamlaluno says, per annum is traditionally used more in financial contexts than per year, but these sentences show that per year is also perfectly acceptable.

• The amount of interest you earn will depend on whether it’s simple or compound interest.
• Over 1.8 million professionals use CFI to learn accounting, financial analysis, modeling and more.
• This means that you earn interest on money you deposit as well as any interest you’ve previously earned.
• For example, if a bank charges an interest of 3% on a loan per annum, it means that you will need to pay an additional 3% of the principal amount every year until the end of the contract.

You will often have to pay interest on things like loans, credit cards and mortgages. Harold Averkamp (CPA, MBA) has worked as a university accounting instructor, accountant, and consultant for more than 25 years. He is the sole author of all the materials on AccountingCoach.com.

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Start with a free account to explore 20+ always-free courses and hundreds of finance templates and cheat sheets. For accounts that only use simple interest, you would only earn interest on the money you pay in, but not any previous interest. When you earn interest on your savings, it is usually calculated daily and then paid either monthly or per annum (annually). To compute the rate per annum we restate the amounts by multiplying both the «2%» and the «20 days» by 18 (in order to get close to the 365 days in a year). An example involves a supplier offering a credit customer an early-payment discount of 2% for paying an invoice in 10 days instead of paying the full amount in 30 days. In this example the supplier is giving up 2% of the invoice amount in order to be paid 20 days early.

These example sentences are representative of the most common uses of these two phrases and, as one can see, there is no real difference between per annum and per year in usage. Take your learning and productivity to the next level with our Premium Templates. When it comes to contracts, per annum refers to recurring obligations or those that occur each year throughout an agreement. For example, if a bank charges an interest of 3% on a loan per annum, it means that you will need to pay an additional 3% of the principal amount every year until the end of the contract.

What does per annum mean?

Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance—as well as CFI’s full course catalog and accredited Certification Programs. Find out more about how interest rates work on borrowing products. Even though the interest may be calculated on a per annum basis, it may be paid to you monthly. Another example involves a business charging its customers 1.5% per month on any past due balance. The monthly rate of 1.5% can be converted to 18% per annum by multiplying the 1.5% times 12 months in a year. All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only.

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Find out more about how interest rates work on savings accounts. The amount of interest you earn will depend on whether it’s simple or compound interest. This means that you earn interest on money you deposit as well as any interest you’ve previously earned. Over 1.8 million professionals use CFI to learn accounting, financial analysis, modeling and more.

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It is a common phrase used to describe an interest rate. Often «per annum» is omitted, as in «I have a 4% mortgage loan.» or «This bond pays interest of 6%.» Stack Exchange network consists of 183 Q&A communities including Stack Overflow, the dcf terminal value formula largest, most trusted online community for developers to learn, share their knowledge, and build their careers. While you can earn interest on your savings, if you borrow money then you may have to pay interest on top of what you borrow.