I just opened a cd an I want to figure out simple interest. Which do I use Interest rate or Yield?
My yield is higher than my interest rate.
2007-12-04 02:58:12 · 2 answers · asked by windsurfingfun 2 in Business & Finance ➔ Renting & Real Estate
Judy's answer is right on.
Since some investments compound at different periods (ie. weekly, monthly, quarterly), the APY will help you compare investments that have the same stated interest return. The more frequently an investment compounds, the higher your yield (APY).
2007-12-04 03:11:42 · answer #1 · answered by Griffin 4 · 1⤊ 0⤋
The APY includes the compounding. The rate doesn't. Most CD's post interest more than once a year, so you're getting interest on the interest - that's what makes the APY higher.
If you are having the interest send to you each month, use the rate. If you're leaving it in, use the APR.
2007-12-04 03:03:30 · answer #2 · answered by Judy 7 · 2⤊ 1⤋