Glossary
APY (Annual Percentage Yield)
APY is the real rate of return on a savings or investment account, accounting for the effect of compounding interest. It's always equal to or higher than the stated interest rate.
Why it matters
APY lets you compare savings accounts and CDs on equal footing, regardless of how frequently they compound. A savings account compounding daily at 4.9% has a higher APY than one compounding monthly at the same rate — APY captures that difference so you can pick the better deal.
Example
A high-yield savings account advertising 5.0% APY on a $10,000 balance earns approximately $500 in one year, compounding daily.
How Ray helps
Ray can show you the interest earned across your savings accounts over time. Ask to see your effective returns across all accounts.
$ ray "how much interest have my savings accounts earned this year?"Related terms
Compound Interest
Compound interest is interest earned on both your original principal and on previously accumulated interest.
APR (Annual Percentage Rate)
APR is the yearly cost of borrowing money, expressed as a percentage.
Yield
Yield is the income return on an investment, expressed as a percentage of the investment's cost or current market value.
Savings Rate
Your savings rate is the percentage of your income that you save or invest rather than spend.
Rule of 72
The Rule of 72 is a quick mental math shortcut: divide 72 by your annual rate of return to estimate how many years it takes for an investment to double in value..