The more money you have to save, the more money you will have at the end of the time period. The higher the rate of interest you can earn, the more money you will have at the end of the time period. The money deposited in financial institutions is, in a sense, being borrowed by the institution. Receiving interest is not as straightforward as it may sound. Since each institution has its own method of calculating the amount of interest a depositor is paid, two different accounts claiming to pay the same interest rate don't necessarily yield the same amount of interest.
Financial institutions use four variables to determine the amount of interest paid on deposits.
The Truth in Savings Act, which took effect in 1993, was designed to help consumers easily compare various savings options. In the past, yield could be calculated hundreds of different ways. APY must be used in advertising and in other disclosures to savers. It gives savers more information on what the money in their account is really earning. The higher the APY, the better the earnings.