Rates & Loans

APY (Annual Percentage Yield)

The yearly return on savings, including the effect of compounding, expressed as a percentage.

What does apy mean?

APY folds compounding into the stated interest rate, so it’s always equal to or higher than the nominal rate. It’s the best figure for comparing savings accounts and CDs, because it reflects what you actually earn over a year.

Put it to use

Compound Savings Calculator Find out how consistent investments over a number of years can be an effective strategy to accumulate wealth. Certificate of Deposit Calculator Use this calculator to find out how much interest you can earn on a Certificate of Deposit (CD).

APY — frequently asked

How is APY different from the interest rate?

APY includes the effect of compounding, while the plain interest rate does not. If an account pays 5% compounded monthly, its APY is about 5.12% — the extra comes from earning interest on your interest during the year.

Is a higher APY always better for savings?

Yes — for deposit accounts a higher APY means more earnings on the same balance, all else equal. Just confirm there are no fees, minimum-balance rules or teaser rates that expire, since those can quietly erode the real return.

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