This topic describes the processing of annual percentage yield in CDs.

A yearly compounded interest rate is represented by the Annual Percentage Yield (APY). Banks publish APY figures for reasonable, single-point comparisons of different product offerings with varying compounding schedules in the United States.

For certificate of deposits, the Annual Percentage Yield (APY) is calculated using the same formula as for a savings account.

APY = (1 + Interest Rate ÷ The number of Compounding in a year) ^ (Number of compounding in a year) – 1.