What is an APY?

BankingWarren TeamPublished April 25, 2026

Quick answer

APY (Annual Percentage Yield) is the effective annual return on a deposit account, accounting for compound interest. A 5% APY is what your money actually earns in a year, directly comparable across savings accounts and CDs.

APY vs APR comparison and impact of compounding.

The information provided is for educational purposes only and should not be considered as personalized financial advice. Warren is a registered investment advisor. Past performance does not guarantee future results. Please consult with a qualified financial advisor before making investment decisions. Read our disclaimers.

All questions

Get an answer built on your own numbers

Warren reads your accounts, then answers questions like this one with your real income, taxes and goals in mind.

Try Warren Free See a demo