Questions tagged [apy]

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12 votes
5 answers
6k views

Should I pay off mortgage or invest in CD?

I am confused about the mortgage rates in APR vs CD rates that I could invest in [US]. I have a mortgage loan that I got with 2.875 APR. I could pay that off or invest that money in a CD with rate of ...
zadane's user avatar
  • 263
1 vote
1 answer
89 views

If APY factors compounding (while APR doesn't), shouldn't APY always be higher than APR?

So, from what I understand: APR: rate advertised to borrowers (without compounding) APY: rate advertised to lenders (with compounding) So, for a loan with APR of 6%, that compounds monthly: APY = (...
António Gonçalves's user avatar
3 votes
1 answer
223 views

How to calculate the APY of an investment account?

I find it helpful to view every kind of account in terms of its current value and APY rate. I know it doesn't technically make sense for an investment account that holds unpredictable stocks and thus ...
kcghost's user avatar
  • 133
15 votes
3 answers
5k views

How does Robinhood’s cash sweep achieve 4% interest?

As of February 2023, Robinhood’s Brokerage Sweep Program guarantees its users 4.15% APY (for those who pay $5 a month for Robinhood Gold). Robinhood is sweeping the cash to banks. Do those banks offer ...
asb1230's user avatar
  • 253
1 vote
2 answers
969 views

Calculating Effective Annual Interest Rate & Annual Percentage Rate with fees (in R)

Problem How to calculate Effective Annual Interest Rate (EAR) and Annual Percentage Rate (APR) with fees (in R) ? I am interested in getting to know how much I am actually paying interest when fees ...
Samuel Saari's user avatar
1 vote
2 answers
329 views

Calculate APY given start balance, end balance, and term

I'm having trouble figuring out the formula for calculating APY given a starting balance, ending balance, and term in length of years. What's the formula to do this?
Nathan Arthur's user avatar
1 vote
1 answer
546 views

Calculating APY and compounding rates of investment on Coinbase

So I have been working on determining which is better: the Coinbase apy seen in coins such as DAI (2%), and Algorand (4%) and a bank's apy, say 0.6%. I have the calculations in Matlab, but wanted to ...
Jacob Anderson's user avatar
2 votes
1 answer
167 views

How can Genisys afford to pay 4.07% APY on checking accounts?

They do say “Must enroll in eStatements and use your Genisys Debit Mastercard® at least ten times per month for purchases of $5.00 or more, excluding ATMs, to earn 4.07%APY.” And that ”Balances ...
Cotton Headed Ninnymuggins's user avatar
2 votes
2 answers
93 views

Calculating daily yields with a different compounding interest

For simplicity's sake, suppose I have an investment that earns 1% daily return on average. The following day, that 1% earning is immediately rolled over into an account that earns 10% yearly ...
eComEvo's user avatar
  • 245
1 vote
1 answer
257 views

What is the catch of getting 9.3% APY for USDC stacking?

I’m sure there is a catch . How is it possible that one can earn over 9% APY on USDC? There are many platforms offering this. Just on example https://blockfi.com/rates/ This looks too good to be true. ...
user109563's user avatar
1 vote
2 answers
177 views

Proper way to annualize returns

Searching for "how to annualize interest rates" on Google leads to the following results: Wikihow's How to Annualize a Percentage Investopedia's Annualized Rate of Return Wikihow ...
Paul Razvan Berg's user avatar
2 votes
1 answer
175 views

Mistake in Investopedia's article on APY?

My question is about James Chen's article on Investopedia, Annual Percentage Yield (APY), last updated on October 17, 2020. It begins by correctly stating the formula for APY: APY = (1 + r / n)^n - 1 ...
Paul Razvan Berg's user avatar
3 votes
3 answers
339 views

Does it make sense to ladder CD's if the APY is the same for different periods?

I understand that CD ladders are a mechanism to take advantage of the various interest rates offered for different time periods. Given that, is there any point investing in longer and longer term CD's ...
286642's user avatar
  • 139
1 vote
2 answers
76 views

CDs vs saving account - which is better if both have same APY?

Currently Marcus by Goldman Sachs is offering the same APY for a 7-Month No-Penalty CD and for an Online savings account. AFAIU a savings account has full liquidity, while the CD forces you to stay ...
Jonathan's user avatar
  • 111
7 votes
1 answer
3k views

What is the typical compounding/amortized period on US mortgage loans

In a different question it is stated that Mortgages are compounded .. 12 times a year in the USA Is this true or just applicable to that question? I am looking at a site where it explains how to ...
puzzled's user avatar
  • 1,016
1 vote
1 answer
205 views

Why does a short-term certificate of deposit (CD) have a significantly smaller annual percentage yield (APY) than a saving accounts in some banks? [duplicate]

I see on Ally Financial's website that a 3-month certificate of deposit (CD) has an annual percentage yield (APY) of 0.75% whereas the saving account has an APY of 1.60%. This surprises me because I ...
Franck Dernoncourt's user avatar
0 votes
1 answer
54 views

Finding the price of an item years earlier from compound interest, simple interest, or APY

Is there a way to use the compound interest formula, simple interest, or APY to find the price of something years earlier if the price of it was increasing by a certain percentage annually?
user30558's user avatar
1 vote
1 answer
542 views

Help me understand and calculate credit union interest in Google Sheets

I have opened a savings account at a credit union and deposited $100. Every month my account tells me I've received $0.02 in interest, and that my deposit dividend is 0.250% and my APY earned is 0.23%...
grgoelyk's user avatar
  • 301
0 votes
1 answer
91 views

Need help figuring out what yearly interest would be?

Even referencing several articles, I can't seem to figure this out; the dividend rate for a savings for instance with $1,000 says it would be 0.10%, compounded quarterly, to me. That means: 1st ...
Brian Deragon's user avatar
1 vote
2 answers
949 views

Does a savings account's advertised "APY" account for compound interest?

From what I've read, typically "APY" typically refers to the effective interest rate of an account (or loan) over the year, while accounting for compounding effects -- for instance, https://www.ally....
Thomas Norris's user avatar
9 votes
3 answers
3k views

"Simple interest rate of 0.10%" corresponds to "APY of 2.54%-5.00%"... how?

This checking account says Balances above $5,000 earn a simple interest rate of 0.10%, with a corresponding APY of 2.54%-5.00% APY. I don't understand how a simple interest rate that is a fixed ...
user541686's user avatar
  • 3,369
1 vote
2 answers
4k views

How does the APY get applied on a CD that is less than one year?

I know that for interest rates you calculate the monthly rate by dividing by 12 (or similarly for any period by the number of periods/year). But if I have a 3 month CD that has a 0.4% APY, does that ...
Fueled By Coffee's user avatar
0 votes
1 answer
2k views

Interest Rate vs. Annual Percentage Yield (APY) [duplicate]

I'm curious as to what the difference between the Interest Rate and Annual Percentage Yield is. For example: This Bank I was looking at offers 0.45% interest rate on savings account balances over $...
DukeLuke's user avatar
  • 745
2 votes
1 answer
396 views

Difference between APR and APY [duplicate]

Possible Duplicate: What is the difference between Interest Rate and APY? Can you explain to me the difference between APR and APY and which one I should care about more? I know that comparing ...
mpenrow's user avatar
  • 3,507
12 votes
1 answer
10k views

What is the difference between Interest Rate and APY?

What is the difference between Interest Rate and APY on savings accounts, CDs, etc? Is there a simple formula to convert the two?
C. Ross's user avatar
  • 7,856