APY tells you what you'll actually earn on a savings account or CD over a year, factoring in how often interest compounds. It's the mirror image of APR — the same math, applied to money you earn instead of borrow.
A savings account paying 5.00% APR that compounds daily has a slightly higher APY (around 5.13%). The difference gets bigger the longer the money stays parked.
Ask Auri — your AI budgeting coach — how this fits your money habits.
Talk to Auri →Frequently asked questions
Is a higher APY always better?
For a plain savings account, yes — same access, higher return. But watch for teaser rates that drop after a promotional window.
How is APY calculated?
APY = (1 + r/n)^n − 1, where r is the nominal rate and n is the number of compounding periods per year.
Does APY change?
Yes. Bank savings and money-market APYs move with central bank rates. A CD locks the APY for the term you commit to.