What is the difference between APY and APR on a CD?

APY reflects what you actually earn including compounding; APR is the simple annual rate before compounding — for CDs, compare the APY.

Updated June 26, 2026

On a certificate of deposit, APY (annual percentage yield) is the number that matters. APY reflects how much you actually earn in a year, including the effect of compounding — interest earning interest. APR (annual percentage rate) is the simple annual rate before compounding is applied.

Because of compounding, the APY is equal to or slightly higher than the APR. When you compare CDs across banks, line up the APYs rather than the stated rates, since two CDs with the same nominal rate but different compounding schedules will pay out differently. The longer the term and the more frequent the compounding, the larger the gap between the two figures.

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Disclosure. This page is general educational information. Deposit accounts and banking services are offered through RMO Bank. RMO Bank deposit accounts — checking, savings, money market, and certificates of deposit — are insured by the FDIC up to the maximum amount permitted by law. Account terms, fees, and rates are disclosed in the applicable account agreement and fee schedule, which govern.