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DepositAccounts.com Article: Understanding Interest Rate and APY

Ken Tumin
Ken Tumin   |     |   5,732 posts since 2009

While I focus on deals, we're going to continue to have others write articles on timeless banking topics. I'll be reviewing them before publication. The latest one was written by Debbie, and it's on Understanding Interest Rate and APY. Even if you're familiar with compounding and APY, you may be interested in the discussion of blended APY. If you have a reward checking account and keep your balance above the main tier, you will be receiving a blended APY.

Ally6770   |     |   1,925 posts since 2010
A great article on explaining interest rates.

I retired a few years ago but I remember in the 80's when interest rates were changing several times a day, a law or regulation was passed that required a bank employee to always  quote the APY first for savings, checking and certificates of deposit.

We did not have to quote the rate or how it was compounded but if we did we still had to quote the APY FIRST . ALWAYS---

THE APY IS THE ONLY THING THAT REALLY MATTERS BECAUSE THAT IS FIGURE THAT WILL TELL YOU HOW MUCH YOU WILL GET AT THE END OF ONE YEAR AND IT MADE IT EASY TO COMPARE FIGURES WITH OTHER INSTITUTIONS.  Wonder if that law or regulation still exists?  A few of us retirees still remember it well. If we did not state the APY first the bank could be fined and we were told we would be fired.