For instance, I have $100,000 and chose a 6-mon term CD at 5% APY. How will the interest be calculated? Will I be paid $5000 each mon. or $5000 for the whole 6-mon. term?
2007-09-04 17:31:02 · 4 answers · asked by Man H 1 in Business & Finance ➔ Personal Finance
with a few dollars do to rounding correct is
3 months 1275
6 months 2500
you will not get the 5000 plus till it stays in for a full year!!!
2007-09-08 10:26:21 · answer #1 · answered by Anonymous · 0⤊ 0⤋
APY stands for Annual Percentage Yield
Calculate you interest yield per month by dividing the 5% by 12(each month of the year)
I believe some banks calculate your interest every quarter. You might not have the benefit of compounded interest if you go for a 6 months DC, so your earnings will be the same whether you keep it in the bank for 3 or 6 months.
Ask your banker when does the bank apply interest to your CD if you want to make sure.
2007-09-05 00:43:49 · answer #2 · answered by 5324 2 · 0⤊ 0⤋
For a 6 month CD you will be paid 2 times per year (12 months /6months). So the rate is 5/100/2= 0.025
After 6 months your total is 100,000 + (100,000 x 0.025)= $102,500
After 12 months your total is 102,500 x (102,500 x 0.025)=
$105,062.50
2007-09-05 02:12:03 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Both CD's are based on annual percentage rate It's $5,000 if you had a 12 month CD.
2007-09-05 01:15:20 · answer #4 · answered by Uncle Pennybags 7 · 0⤊ 0⤋