Annual Percentage Yield (APY)

Annual Percentage Yield (APY) expresses the cost of borrowing or the return on investment on an annual basis, taking into account the effect of compounding interest. It provides a standardized way to compare different financial products, such as savings accounts, loans, and investments.

Unlike Annual Percentage Rate (APR), which ignores compounding, APY includes it, making APY slightly higher whenever interest compounds more than once per year.