APY
Annual percentage yield: the yearly return on savings, including the effect of compounding. Use it to compare savings accounts.
APY tells you how much a deposit earns in one year when interest is added to your balance and then earns interest itself. Because it includes compounding, it is a little higher than the simple interest rate when interest is paid monthly or daily.
Banks must show APY on savings accounts and CDs, which makes it the fair way to compare them. Rates on most savings accounts can change at any time.
Example
A 4% interest rate compounded monthly gives an APY of about 4.07%. On $10,000 kept for a year, that is about $10,000 × 4.07% = $407.