Basic Math/Savings Accounts
I have recently been reviewing which savings account to select based on their rates. There are many varied rates, but I am quite surprised at what appears to be very low interest rates.
I've read that you should always compare APY to APY, so could you please tell me what we are talking about here. I looked at one bank and it said .01% APY. Another one said .90% APY.
Both look a bit paltry, but I've come to the conclusion that I do not understand percentages very well. So could you calculate what would be in my account at the end of a year at both of the above rates.
And could you confirm that both numbers above .01% and .90% are less than one percent. When I first looked at it I thought I was reading 1 percent, then after a while I thought this might be .01 of 1 percent.
Percentages has never been my thing, and I now see that it never will. Can you help me with this. Thank you very much.
You are correct, both rates are below 1% (interest rates really suck now, unless you want to borrow money). I don't know how much money you're starting with, so I can't tell you how much you'd have at the end of a year, but with the .9% rate, for every $100, you get approx 90 cents. Since it's probably compounded monthly, and if you didn't take any money out, the next month, the interest would be a little higher because you're now being paid interest on the interest as well, but when we're talking about .9%, it's not enough to worry about. If you start with $1000 you'll have a whole $9 interest at the end of the year. If this is money you don't need for 6 months, a year or more, CDs usually have slightly better interest rates, but it has to be money that you don't need for that period of time.