I have a savings account making me 3.93% interest at 4.00% APY, what is the difference?
2007-02-21 11:47:37 · 2 answers · asked by nickhawkins21 3 in Business & Finance ➔ Personal Finance
The interest is compounded. That means instead of paying you (for example) 3.93% at the end of a year, they pay 1/12th of that each month. The additional interest you make on the interest paid to you works out to 4%.
If you open your account with $100, after a month they pay you $3.93/12=.32. The next month, that .32 is earning interest too.
2007-02-21 11:55:54 · answer #1 · answered by Aldo the Apache 6 · 0⤊ 0⤋
If you leave the money in the account for one year the actual interest (APY) is 4%. So if you have $100 at 3.93% and take a monthloy check, you would get $3.93/12 or $.33 per month but if you leave it in there the compounding interest would make $4.00 per year
2007-02-21 11:57:23 · answer #2 · answered by jamv0051 3 · 1⤊ 0⤋