Annual Percentage Yield (APY)
What is Annual Percentage Yield?
The yearly return on savings, including the effect of compounding.
Understanding Annual Percentage Yield
APY shows what a savings account or CD actually earns in a year once interest is compounded. It is the right number for comparing savings products.
The more often interest compounds, the higher the APY for the same stated rate.
Formula
Example
A 5% rate compounded monthly gives an APY of about 5.12%.