Generally speaking, the difference is this:
“affect” is a verb meaning to have an influence on, to cause a change in something (often negative),
“effect” is a noun meaning a result.
So, for example: If an area is affected by flooding, the effect can be devastating.
The authorities banned the use of chemical insecticides in the worst affected areas.
A wide range of Japanese exports to the United States have been affected by the agreement.
Short-term unemployment may have no serious effect on an individual; long-term unemployment can be devastating.
The effect of the medication is virtually instantaneous.
There are also less common uses of the words:
“affect” as a verb meaning to simulate, put on a false show.
I couldn’t believe it! At the meeting he affected total ignorance of the whole plan.
Although he’s British he affects a very convincing American accent.
“affect” is also used as a noun, meaning a feeling or emotion, mainly in the context of psychology.
“effect” can also be used as a verb, meaning to cause to occur, to bring into existence, execute (it often collocates with the word “change”).
The changes effected by the new legislation led to a comprehensive revision of our employment policies.
She was mistaken about the essential character of the document she signed and did not know about the transaction which it effected.
“in effect” is an idiom that means in essence, to all purposes.
The policy is, in effect, a tax cut for banks.
We should also note that there are some trade measures that are protectionist in effect, and have strong links with competition policy.
Rules, legislation, agreements etc. can be said to come into effect or take effect when they start operating.
The ban was agreed by international treaty in 2010, but did not come into effect until 2012.
The changes took effect without any serious disruption to manufacturing processes.
“personal effects” means private belongings.
He came to the house yesterday to pick up some of his personal effects.
Comparison of “affect” and “effect” as verbs
The changes to the regulations will affect savings.
= The changes will probably reduce savings.
The changes to the regulations will effect savings.
= The changes will lead to new savings being made.