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SESK: Stuff Everyone Should Know · sesk.info/teen-apy-compare

To compare how much interest savings accounts pay, which number does the FDIC say to compare?

The APY, not the plain interest rate.

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  1. The advertised interest rate
  2. The minimum deposit to open
  3. The Annual Percentage Yield (APY) ✔

Why: APY shows how much interest you earn in one year, including the effect of compounding. Two accounts with the same rate can pay different amounts if they compound at different times, so APY lets you compare fairly.

Huh, didn't know that: A law called the Truth in Savings Act requires banks and credit unions to give a disclosure statement that shows the APY.

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Where do polar bears go to keep their money safe? In snowbanks.
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References

Answer: The Annual Percentage Yield (APY). APY shows how much interest you earn in one year, including the effect of compounding. Two accounts with the same rate can pay different amounts if they compound at different times, so APY lets you compare fairly.

  1. FDIC Money Smart Podcast: open a savings account www.fdic.gov/sites/default/files/2024-03/mspn-3-2-plan-open-savings.pdf
    always compare the APYs, not the overall interest rates.
    Checked 2026-10-10.

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