3.75% APY means an account earns an annual percentage yield of 3.75% over one year, including the effect of compounding interest. APY is commonly used for savings accounts, money market accounts and certificates of deposit.
3.75% APY at a Glance
| Starting balance | Approximate interest after one year | Ending balance |
|---|---|---|
| $100 | $3.75 | $103.75 |
| $1,000 | $37.50 | $1,037.50 |
| $10,000 | $375.00 | $10,375.00 |
These examples assume the 3.75% APY stays unchanged, the money remains in the account for a full year, and you make no withdrawals or additional deposits. They also exclude account fees.
How Does 3.75% APY Work?
3.75% APY combines the account's interest rate with the frequency of compounding. Federal deposit-account rules calculate APY over a 365-day period.
For example, if you deposit $1,000 into an account offering 3.75% APY and leave the money untouched for one year:
- Interest earned: about $37.50
- Ending balance: about $1,037.50
- Annual return: 3.75%
The result may change if the bank changes a variable rate, you withdraw money, make additional deposits or pay account fees.
Is 3.75% APY the Same as 3.75% Interest?
No. APY and the stated interest rate are different measures. APY shows the effective yearly return after compounding. A bank's stated interest rate may be slightly lower because APY includes interest added to the account balance and the interest earned on that amount.
If interest compounds monthly, a 3.75% APY equals approximately 0.307% monthly growth, not 3.75% every month.
What Is the Difference Between APY and APR?
APY measures how much a deposit account can earn in a year, including the effect of compounding. APR generally describes the annual cost of borrowing and may include certain fees, depending on the financial product.
For a savings account, compare APY. For a loan or credit card, compare APR.
Is 3.75% APY Good?
Whether 3.75% APY is good depends on the account's terms and the other accounts you are considering. Check:
- Whether the APY is fixed or variable
- Minimum balance requirements
- Monthly maintenance fees
- Withdrawal or transfer limits
- Whether the rate applies to the full balance or only a specific tier
- Whether the account is insured by the FDIC or another applicable deposit-insurance program