When it comes to saving money, most people know about the importance of compounding interest. The more frequently your interest is compounded, the more money you’ll earn on your savings in the long run. But what about when you’re earning interest on your savings? How do you calculate the annual percentage yield (APY) on a certificate of deposit (CD)?

The calculation is simple, but it can be a little confusing if you’re not used to working with percentages. To find the APY on a CD, divide the annual interest rate by the number of periods in a year. Then, raise …