Calculating "APY"

Yan_Yao · Sep 14, 2006

HSBC=5.05% apy
Emigrant=5.15%

If I deposited $20000, how much interest would I earned after 6 months for
HSBC?
Emigrant?

Both of them are compound daily, right?

Citibank 6 months CD=5.5% apy
If I deposited $28,489.09, how much interest would I earned after
1 month?
6 months?

I'm really having problem, because citibank's number are different than what I end up with, I don't know if citibank compound daily or monthly or what.

RedRacer · Sep 14, 2006

Yan_Yao said:

HSBC=5.05% apy
Emigrant=5.15%

If I deposited $20000, how much interest would I earned after 6 months for
HSBC?
Emigrant?

Both of them are compound daily, right?

QUOTE]

I believe its yearly compounded .... link here

Compound interest, is interest which is added to the original principle. New interest is then calculated, not only on the principle, but also on the interest that has been added. The more frequently interest is compounded, the faster the principle grows. Yearly compounded interest is considered the norm unless it is specified to be otherwise.

Disclosure. Interest rates must be comparable in order to be usefull. Since most people think of rates as a yearly percentage, many governments require financial institutions to disclose the comparable yearly interest rate on deposits or advances. It can be called variously Annual Percentage Yield, or Annual Equivalent Rate or Effective Annual Rate.

Exceptions.

US and Canadian T-Bills (short term Government debt) have a different convention. Their interest is calculated as (100-P)/P where 'P' is the price paid. Instead of normalizing it to a year, the interest is prorated by number of day 't': (365/t)*100. The total calculation is
((100-P)/P)*((365/t)*100)

--------------------------------

You need at least $40000 in ING + in order to get approximately $100+ in APY interest.
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Calculating "APY"

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