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Rounding Up Of APY (Navyfed, Bask, And Other Places)

racecar
  |     |   628 posts since 2014

Just a heads up to everyone.

NavyFed (and some other places) like to "round up" their advertised APY, and actually pay a bit less.

For instance, in 2023 I got some long-term IRA CDs from Navy that they promoted as "4.2% APY" but that actually pay 4.195% (the least amount that legally lets them advertise 4.2% when it's actually not). The Rate (APR) is 4.110%, and even with compounding daily, 4.110% APR = 4.195% APY. But of course NavyFed "rounds it up" to advertise "4.2%."

Many other places do this "rounding up" too, including Bask Bank, though many are more honest and do not.

The difference isn't huge perhaps, but people should be aware of this, especially if a lot of funds are involved. To accurately know what it's actually going to pay, look at the Rate (APR) and compounding frequency, not the advertised APY.

There are good online calculators like this one that show the APR/APY numbers, and after letting you set the compounding frequency, will tell you what you'll actually earn.

https://www.omnicalculator.com/finance/apy

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w00d00w
  |     |   360 posts since 2012
never occurred to me that banks/CUs were being less honest by truncating their APYs at two decimal places and rounding up. just seems like standard practice. do however get the 3rd decimal place for yields on all varieties of fixed income purchased at a brokerage. attention to this sort of minutiae is not typically on my radar.
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