APY (Annual Percentage Yield)
The yearly return on savings, including the effect of compounding.
Why it matters
APY is the mirror image of APR: it tells you what you earn on money, not what borrowing costs you. Because it accounts for compounding, APY is slightly higher than the stated interest rate on a savings account. A 4.0% APY on a high-yield savings account earns more over a year than a 4.0% simple rate would.
See also
Educational only — not financial, tax, or legal advice.