APY (Annual Percentage Yield)
APY is the real rate of return on savings over a year, including the effect of compound interest. Because it accounts for interest earning interest, APY is always equal to or higher than the stated interest rate, and it is the number to compare when shopping for savings accounts or CDs.
A 4.4% nominal rate compounded monthly produces an APY of about 4.49%. The Truth in Savings Act requires banks to advertise APY precisely so accounts can be compared on equal footing regardless of compounding frequency. Two practical notes. The gap between monthly and daily compounding is small — on a 5% rate it is about a hundredth of a percentage point — so it is not worth choosing a bank over, while a whole point of difference in the headline rate certainly is. And a savings account's APY is variable: it is what you would earn if today's rate held for a year, not a promise. Only a CD locks it for the term.
Put it to work
Savings Calculator
Watch your savings account grow: enter your balance, monthly deposit, and APY to see the future value and every dollar of interest along the way.
CD Calculator
Calculate a certificate of deposit's value at maturity, the interest earned, and the true APY from any rate and compounding frequency.
Compound Interest Calculator
See how your savings grow with compound interest and monthly contributions — final balance, interest earned, and a year-by-year growth table.