# 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.

**Terminal**

`$ ray "how much interest have my savings accounts earned this year?"`

### Related terms

- [Compound Interest](/content/learn/compound-interest/index.html)\
  Compound interest is interest earned on both your original principal and on previously accumulated interest.
- [APR (Annual Percentage Rate)](/content/learn/apr/index.html)\
  APR is the yearly cost of borrowing money, expressed as a percentage.
- [Yield](/content/learn/yield/index.html)\
  Yield is the income return on an investment, expressed as a percentage of the investment's cost or current market value.
- [Savings Rate](/content/learn/savings-rate/index.html)\
  Your savings rate is the percentage of your income that you save or invest rather than spend.
- [Rule of 72](/content/learn/rule-of-72/index.html)\
  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.