Annual Percentage Yield (APY)

Annual percentage yield expresses an annualized return that incorporates compounding, allowing deposit or reward products with different compounding schedules to be compared.

APY converts a periodic rate into the return that would result over one year if the stated rate and compounding assumptions remained unchanged. A displayed APY is not the same as a guaranteed cash amount when rates are variable, rewards are paid in a volatile asset, or fees and early-exit terms apply. The product terms should identify the calculation basis, crediting frequency, lock period, and whether the rate can change.

An annualized projection can overstate the outcome if a variable rate falls, rewards are not compounded, or the underlying asset loses value.