APY calculated monthly?

[edro]

Let's say the APY is 3.5%.

If I wanted to calculate the APY per month, couldn't I simply divide .035 by 12 to get .0029167?

Say my balance at the end of the month is $100, the calculated interest would be $0.29167, right?

Something isn't adding up...

 

[RaWrulez]

http://www.fdic.gov/regulations/laws/rules/6500-3270.html

 

[FleshLight]

You forgot about compounding interest.

 

[mugs]

If it were APR, you could divide by 12, but APY takes into account compounding... so no.

 

[edro]

Originally posted by: RaWrulez
http://www.fdic.gov/regulations/laws/rules/6500-3270.html

Wow, thanks.

 

[spidey07]

Originally posted by: edro

Originally posted by: RaWrulez
http://www.fdic.gov/regulations/laws/rules/6500-3270.html

Wow, thanks.

yeah, I just read through it. Good stuff.

 

[imthebadguy]

apy = annual NOMINAL rate divided by periods per year (12)

but you're EAR(effective annual yield) is higher because it takes into consideration the compounding, APR and APY are just lies 😉 meant to fool you