Only Clyde Finds the Best Card
Based on How You Spend.
What is APY?
A quick look into what the APY indicates.
By: Raghav Rasal
See Top Credit Cards by Category:
Our editorial team's content is not provided or commissioned by any financial institution or partner. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. All editorial decisions regarding methodology and recommendations are determined separately from advertising relationships. The information, including card rates and fees, presented in the review is accurate as of the date of the review.

The APY (Annual Percentage Yield) refers to the rate of return from a deposit or investment after taking compound interest into account. Unlike simple interest, where the interest is only based on the principal (initial) amount of the loan, compound interest takes both the principal value and the interest from past periods into account. Therefore, compound interest means that your account balance gets larger along with the amount of interest you pay. The APY should not be confused with the APR, which is a metric that uses simple interest and indicates how much money an investment/deposit can make after a year. 

The formula for calculating the APY is as follows:

APY = 100 [(1 + r/n)^n] – 1 

r - annual interest rate (as a decimal)

n - number of compounding periods per year 

Through this formula we can therefore understand that you can increase your APY by increasing n (i.e. increasing the no. of compounding periods per year). Therefore, many investors choose to compound quarterly or even more frequently as opposed to annually.

Free Forever

Clyde is an always-free service. We’re passionate about financial transparency and strive to get you the most for your money.

100% Secure

We are serious about security. We encrypt all the data you share with us to ensure your experience is both easy and safe.