The annual percentage yield measures the
total amount of interest paid on an account based on the interest
rate and the frequency of compounding. The annual percentage yield
reflects only interest and does not include the value of any bonus
(or other consideration worth $10 or less) that may be provided to
the consumer to open, maintain, increase or renew an account. Interest
or other earnings are not to be included in the annual percentage
yield if such amounts are determined by circumstances that may or
may not occur in the future. The annual percentage yield is expressed
as an annualized rate, based on a 365-day year. Institutions may calculate
the annual percentage yield based on a 365-day or a 366-day year in
a leap year. Part I of this appendix discusses the annual percentage
yield calculations for account disclosures and advertisements, while
part II discusses annual percentage yield earned calculations for periodic
statements.
