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Glossary term

APY

Annual Percentage Yield

🌍 UniversalReviewed Plain-English
Definition

What is APY?

APY is the effective annual return on savings, accounting for compounding. A 5% nominal rate compounded monthly = 5.12% APY. Banks must quote APY on deposits so you can compare apples-to-apples. Higher compounding frequency = higher APY for the same nominal rate.

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