Definition
APY (Annual Percentage Yield)
The yearly return on savings, including the effect of compounding.
This term appears in The Budget Ledger's practical finance glossary.
APY tells you how much a savings account or CD will earn you in a year, accounting for compound interest. A higher APY means your money grows faster.
APY is the savings-side mirror of APR: APR is what you pay to borrow, APY is what you earn to save. High-yield savings accounts advertise their APY because it is meaningfully higher than a standard bank account.