Annual Percentage Yield (APY)

The Annual Percentage Yield (APY) measures the total amount of interest paid on an account based on the interest rate and the frequency of compounding. The APY is expressed as an annualized rate based on a 365 day year.

Appendix A of Regulation DD states that, in determining the total interest figures in most cases, institutions must assume that all principal and interest remain on deposit for the entire term. Also, that no other transactions occur during the term. For time accounts, institutions must base the number of days on either the actual number of days during the applicable period, or the number of days that would occur for any actual sequence of that many calendar months.

See Appendix A of Regulation DD for formulas used to calculate the APY.