Savings and Treasury Glossary: Interest Terms Explained

A yearly rate without compounding, used mainly for loans. For savings, compare APY instead.

The yearly return on a deposit including compounding. Use it to compare savings accounts and CDs.

Interest earned on both your deposit and the interest already added to it.

The return on an investment, shown as a yearly percentage. How it's worked out depends on the product.

A chart of yields on Treasuries of different maturities on the same day.

How the Treasury sells new bills and bonds on a set schedule. The auction sets the rate.

The overall I bond rate, combining the fixed rate and the inflation rate. It resets every six months.

The unique ID number for a specific Treasury security or other security.

The T-bill rate quoted on the discount from face value, based on a 360-day year.

The part of an I bond's rate that stays the same for the life of the bond.

The tax form that reports interest income you earned during the year.

A US savings bond whose rate combines a fixed rate and an inflation rate.

The T-bill yield on the price you actually pay, based on a 365-day year. It's higher than the discount rate.

The date a security or CD ends and pays back its face value or principal.

A bid that accepts whatever rate the auction sets. Most individual buyers use it.

Interest on Treasury securities is exempt from state and local income tax, though federal tax applies.

A short-term US government security sold at a discount and repaid at face value at maturity.

The US Treasury's website for buying bills, notes, bonds and savings bonds directly.

A CD bought through a brokerage account rather than directly from a bank. It can be sold before maturity at market price.

Splitting savings across CDs with different maturities so some money becomes available at regular intervals.

A deposit that pays a set rate for a fixed term. Withdrawing early usually costs a penalty.

The interest a bank keeps if you take money out of a CD before maturity.

Federal deposit insurance that protects deposits at insured banks up to the legal limit if a bank fails.

A savings account that pays a higher rate than a typical bank account, often online.

A bank or credit union deposit account that pays interest and may allow checks or a debit card.

An investment fund that holds short-term debt. It isn't a bank deposit and isn't FDIC insured.

The credit union equivalent of FDIC insurance, for deposits at federally insured credit unions.

APY includes compounding and is used for savings. APR doesn't and is used mainly for loans.

Treasury interest is subject to federal income tax but exempt from state and local income tax.

It combines a fixed rate and an inflation rate into a composite rate that resets every six months.

No. Money market accounts at banks can be, but money market funds are investments, not deposits.

Most banks charge an early withdrawal penalty, usually a set amount of interest.