APY stands for Annual Percentage Yield. It shows how much money you'll earn in a year on savings or investment accounts, including the effect of compound interest. APY is always higher than or equal to the stated interest rate because it accounts for interest earning interest.
A savings account might offer 4% APY. If you deposit $1,000, after one year you'll have about $1,040 because the bank adds interest multiple times throughout the year, not just once at the end.
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