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JPEG

You can use JPEGs for projects on the web, in Microsoft Office documents, or for projects that require printing at a high resolution. Paying attention to the resolution and file size with JPEGs is essential in order to produce a nice-looking project. JPG vs JPEG? There is no difference between the .jpg and .jpeg filename extensions. Regardless of how you name your file, it is still the same format and will behave the same way. The only reason that the two extensions exist for the same format is because .jpeg was shortened to .jpg to accommodate the three-character limit in early versions of Windows. While there is no such requirement today, .jpg remains the standard and default on many image software programs.

PSD

PSDs are files that are created and saved in Adobe Photoshop, the most popular graphics editing software ever. This type of file contains layers that make modifying the image much easier to handle. This is also the program that generates the raster file types mentioned above. The largest disadvantage to PSDs is that Photoshop works with raster images as opposed to vector images.