Effective Annual and Percentage Yields
Effective annual rate and yield terms used to compare quoted rates after compounding effects.
Banking terms for APY, AER, effective annual rates, compounding, money-market yields, and day-count conventions.
Effective yields and compounding terms translate quoted interest rates into comparable annualized costs or returns after compounding and day-count conventions are considered.
Use this branch when two rates look similar but are quoted on different bases, compound at different frequencies, or use different money-market conventions.
| Area | Use it for |
|---|---|
| Effective Annual and Percentage Yields | APY, AER, effective annual rate, and nominal-versus-effective comparisons. |
| Money Market, Day Count, and Annuity Rates | Actual/360, banker-year, money-market yield, and annuity-rate conventions. |
A 5% nominal rate compounded monthly is not the same as a 5% effective annual yield. A money-market instrument quoted on an Actual/360 basis may not compare cleanly with a deposit account quoted by APY. The right comparison depends on cash-flow timing, compounding, fees, and disclosure rules.
These pages explain rate conventions for education; actual product outcomes depend on the contract and applicable disclosure rules.
Choose a subsection first. Deeper term pages live inside each subsection, which keeps large topic hubs readable.
Effective annual rate and yield terms used to compare quoted rates after compounding effects.
Money-market yield, day-count, banker-year, and annuity-rate terms used in banking rate conventions.