What is APY (Annual Percentage Yield)?
The annual interest rate on a savings account, expressed as a percentage of your balance with compounding included. On savings accounts we track, APYs currently range from 0.01% at big traditional banks to 4.25% at the best online accounts.
Updated September 2026
APY stands for Annual Percentage Yield. It's the interest rate a bank pays you on your savings, expressed as a yearly percentage of your balance. If you have $10,000 in an account with a 4% APY, you'd earn roughly $400 over the course of a year.
The reason it's called "yield" instead of just "rate" is because it accounts for compounding. Compounding is when you earn interest on top of interest you've already earned. Most savings accounts compound daily or monthly, which means your balance grows slightly faster than a simple yearly rate would suggest. The APY rolls all of that into one number so you can compare accounts fairly.
The spread between banks is enormous. Among the accounts we track as of September 2026, big traditional banks pay as little as 0.01% on checking, while online accounts pay real money: E*TRADE's Premium Savings pays a promotional 4.25% for 6 months, SoFi Checking & Savings pays 3.80%, and Barclays' Tiered Savings pays 3.50%. On a $10,000 balance, that's the difference between earning about $1 a year and earning about $425 a year. Same deposit insurance, same access to your money. That gap is the entire pitch of a high-yield savings account.
Here's the part most rate-chasing articles skip: for the timelines that matter in bank bonuses, the sign-up bonus is usually worth far more than the interest. Say a bonus asks you to hold a $5,000 minimum balance for 90 days. At 4.25% APY, that earns you about $52 in interest. If the account pays a $300 bonus for the same requirement, the bonus is worth nearly six times the interest over the same window. The interest is a nice tailwind while you wait out the hold period. The bonus is the reason you're there.
One thing to keep in mind: APY is variable. Banks can change it whenever they want, and they usually do when the Federal Reserve adjusts rates. A bonus works differently. Once you meet the requirements, that money is locked in. If you want both, some accounts pay a competitive APY and a sign-up bonus on top. You can browse current bonuses and compare the APY listed on each account's detail page.
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