What Is Annual Percentage Yield (APY)?

The Annual Percentage Yield (APY) is the real rate of return earned on a savings deposit or investment taking into account the effect of compounding interest.

• APY is the actual rate of return that will be earned in one year if the interest is compounded.
• Compound interest is added periodically to the total invested, increasing the balance. That means each interest payment will be larger, based on the higher balance.
• The more often interest is compounded, the better the return will be.