Financial Glossary

APY (Annual Percentage Yield)

APY measures the total amount of interest earned on a deposit account over one year, taking into account the effect of compound interest. Unlike simple interest rates, APY reflects how often interest compounds (daily, monthly, quarterly), making it the most accurate measure of an account's earning potential. Higher compounding frequency results in higher APY.

Example

A savings account offering 4.50% interest compounded monthly has an APY of 4.59%. This means $10,000 deposited would grow to $10,459 after one year. The same 4.50% rate compounded daily would yield an APY of 4.60%. Always compare APYs rather than interest rates when evaluating savings accounts.

Frequently Asked Questions

What is the difference between APY and APR?

APY applies to deposit accounts (savings, CDs) and measures what you earn. APR applies to loans and measures what you pay. APY accounts for compound interest, while APR accounts for fees. Both are annualized rates that help consumers compare financial products.

How does compounding frequency affect APY?

More frequent compounding increases APY. Daily compounding yields a higher APY than monthly compounding at the same nominal interest rate. The difference is small for most accounts but becomes significant over longer periods and larger balances.

Related Resources

Investment Calculator Compound Interest Examples All Glossary Terms

Official Sources

New Zealand calculators use data from the following official government agencies:

Inland Revenue (IRD) — Income tax brackets, KiwiSaver rules, and ACC levies.
Stats NZ — Wage data, employment statistics, and cost of living indices.
Reserve Bank of New Zealand (RBNZ) — Official cash rate and monetary policy data.

Methodology

Our New Zealand calculators follow tax brackets, KiwiSaver contribution rates, and ACC levies published by Inland Revenue (IRD). Economic data is sourced from Stats NZ. Mortgage calculations use RBNZ official cash rate and market averages. All figures are for educational purposes.

Data Sources

All tax brackets, contribution rates, and economic data used in our calculators are sourced from the official government publications listed above. Rates are updated at least annually to reflect the latest tax year and regulatory changes. Users should verify critical figures with official sources or qualified professionals.

Last updated: June 2026. Information may change; always verify with official sources.

Last Updated: June 2026 — Reviewed Against Official Sources