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This is a reasonable approximation if the compounding is daily. Also, a nominal interest rate and its corresponding APY are very nearly equal when they are small. For example (fixing some large N), a nominal interest rate of 100% would have an APY of approximately 171%, whereas 5% corresponds to 5.12%, and 1% corresponds to 1.005%.
Following our earlier example, if your dividend rate at a credit union is 4.5% and interest is compounded monthly, your APY would be 4.59% for the same account.
The terms "APY" and "interest rate" are often used interchangeably when people discuss savings and investments, but there's a very important distinction between the two. While it's important to...
APY is a popular metric that allows holders of deposit accounts to accurately understand the amount of interest income generated by their account.
Key financial terms like APY and APR can be confusing to interpret, especially when factored into the true cost of borrowing money or the parameters of spending it. Whether you are looking for a...
As the Fed rate rises, so do APYs on savings accounts, CDs and money market accounts — with today’s rates on the best high-yield savings accounts topping 4% APY. After increasing the target ...
Here’s what the letters represent: A is the amount of money in your account. P is your principal balance you invested. R is the annual interest rate expressed as a decimal. N is the number of ...
As the Fed rate rises, so do APYs on savings accounts, CDs and money market accounts — with today’s rates on the best high-yield savings accounts topping 4% APY. After increasing the target ...