Financial Information
Can someone clarify what interest rates do for the money in my savings account?
I’ve asked this question before but I was not clear enough. I have a 4. 89% interest rate for my savings account and 5% apy. If I have for example $3,000. 00 in my savings account now, does the 4. 89% add to that money I have? I thought that if it did work like that I would get a large amount of interest back each month. Could someone please help me! I would very much appreciate it.
The 4.89% interest rate compounds monthly to yield the 5.0% APY. If you have $3000 in your savings account after 1 month you would have earned (1/12)x4.89% interest which on $3000.00 is $12.23. Is that the large amount of interest you expected?
Interest rate versus APY: 4.89% rate equates to a 0.4075% rate per month. In 12 months the compounded yield (APY) would be (1.004075)^12-1 = 5.00%