Economics Personal Finance

Q&A: What is APY (annual percentage yield)?

APY (annual percentage yield) is usually a rate of return tied to a checking or savings account. When APR (annual percentage rate) takes into account compounding and there is more than one period, it becomes APY.

Pro Tip: Banks and credit unions almost always advertise their rates of return in terms of APY, as it will be higher than what the APR, or the rate before compounding, is.

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