Certificate of Deposit

Question: When opening a Certificate Of Deposit, which rate is more important, the interest rate or APY?

Also, how is interest calculated? Can u provide an example? Thanks

Answer: If it is for less than a year then APY does not apply. Because APY is annual percentage yield. So, if you open a CD for 12 months or 14 months or 2-3 years than I would say APY rate could help you out. Some times, banks do offer higher APY for 4- 5 years certificate of deposits.
Therefore, I would say interest rate is important for less than 12 months CD.
Interest calculation: for e.g. if you open a CD of $1000.00 for 6 months @ 6.00% rate. 1000.00 x 6%= 60
then 60 divide by 12 months = $5.00 per month. So, interest for 6 months = $30.00.
I hope this example will help you out.

Certificate Of Deposit Rates