JPG vs. PNG

It is best to save photographs as JPG or JPEG - for altered colors, gradients and textures. JPEG stands for Joint Photographic Experts Group that created the standard. JPG loses a bit of clarity each time it is copied, due to compression.

Graphics and screenshots are best saved as PNG. PNG stands for Portable Network Graphics, which is a bitmap image format that uses lossless data compression. If it has pointed lines, clearly unconnected areas of flat colors and text, PNG is best. File compression for a PNG is lossless, which keeps all of the data contained in the file, within the file, during the process. Lossless compression is necessary when you have images that are still in the editing process. PNGs are often used if size is not a concern and the picture is complicated because a PNG file holds additional information than a JPG.
Basic Rule: JPG for Photos, PNG for Graphics.