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Making Cents of Annual Percentage Yield (APY)
“Today Ascentra is Making Sense of Annual Percentage Yields”
The APY is the actual rate of return that includes compounding interests on savings accounts, and investments that financial institutions pay you.
While it’s important to compare the APY, the frequency of compounding is just as important.
Because some financial institutions compound more frequently, comparing accounts based on the APY alone, is not accurate.
Say two financial institutions offer a CD for 12 months at 2% APY, but one pays out compounding interest monthly, and the other annually.
Your return will be higher with the one that compounds monthly, since each month; you have an increasing principle earning interest, as opposed to only once.
Also, be sure to compare penalties for pulling money out of an account early, or if you fall below a certain balance. This may reduce your interest earnings, principal balance, or even hit you with fees.
Read the fine print when comparing accounts or CDs, and realize that the highest APY doesn’t always pay you the best.
- Banking
- Making Cents

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Fixed Rate Mortgage
10 & Done (10 Year Fixed)6.25View Mortgage Loans% -
Vehicle Loans
New & Used Auto as Low as5.75View Vehicle Loans% APR -
Savings
Membership Share Savings Starting at0.05View Savings Accounts% APY -
Credit Cards
No Balance Transfer Fee. 6-Mo. Intro Balance Transfer2.99View Credit Cards% APR