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APY
(Annual Percentage Yield)
APY (Annual Percentage Yield) measures the total return on savings or investments, including compound interest, over a year. It’s a key metric for comparing high-yield savings accounts (HYSA), CDs, and other interest-bearing products.
For instance, a savings account with a 2% APY earns more than one with a 1.9% APY due to compounding. The FDIC mandates APY disclosures to ensure consumers can make informed decisions. Unlike APR, which reflects borrowing costs, APY highlights earning potential. Investors prioritizing growth should prioritize accounts with competitive APYs, especially in rising-rate environments.
For instance, a savings account with a 2% APY earns more than one with a 1.9% APY due to compounding. The FDIC mandates APY disclosures to ensure consumers can make informed decisions. Unlike APR, which reflects borrowing costs, APY highlights earning potential. Investors prioritizing growth should prioritize accounts with competitive APYs, especially in rising-rate environments.