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Definition: APY is an acronym for annual percentage yield, which is a rate reflecting the total amount of interest paid on a deposit account, based on the interest rate and the frequency of compounding for a 365-day period.
What does this mean for you?: You will see APY on interest-bearing deposit accounts, like a savings account or certificate of deposit (CD). Banks are required to disclose the APY to customers when opening a deposit account. It is important to compare the APY, along with other account features, when looking for a new savings account. The higher the APY, the more your savings can earn.
Source: American Bankers Association