Interest on a CD (Certificate of Deposit)

[Spooner]

I just bought a $10,000 12-month fixed rate CD with the following rates:

Interest Rate: 3.450%
Annual Percentage Yield: 3.510%

how does the interest work exactly?

 

[nakedfrog]

I was expecting a question about an audio CD, and thusly am not prepared to answer your question.

 

[DivideBYZero]

Originally posted by: nakedfrog
I was expecting a question about an audio CD, and thusly am not prepared to answer your question.

Me too.

 

[Spooner]

fixed the title to be clearer

 

[randomlinh]

shouldn' t you have looked into that before buying it?

 

[Wizkid]

3.450% (per year) but compounded daily (3.450% / 365 daily rate) averages to 3.510% annually.

You will get $10,000 x 3.510% = $351 interest, so you will cash it in for $10351.

 

[akenbennu]

At the end of th 12 month period, you'll have an extra $351 (less taxes, I think)

 

[cjgallen]

Originally posted by: lnguyen
shouldn' t you have looked into that before buying it?

hehe

ING has 12 month CDs at 4.2%

 

[Spooner]

Originally posted by: lnguyen
shouldn' t you have looked into that before buying it?

you'd think so, wouldn't you?

 

[Spooner]

Originally posted by: Wizkid
3.450% (per year) but compounded daily (3.450% / 365 daily rate) averages to 3.510% annually.

You will get $10,000 x 3.510% = $351 interest, so you will cash it in for $10351.

only paid out anually?

meh

 

[BlueWeasel]

Originally posted by: Spooner

Originally posted by: Wizkid
3.450% (per year) but compounded daily (3.450% / 365 daily rate) averages to 3.510% annually.

You will get $10,000 x 3.510% = $351 interest, so you will cash it in for $10351.

only paid out anually?

meh

Aren't most CDs paid out quarterly?

 

[crypticlogin]

Originally posted by: BlueWeasel

Originally posted by: Spooner

Originally posted by: Wizkid
3.450% (per year) but compounded daily (3.450% / 365 daily rate) averages to 3.510% annually.

You will get $10,000 x 3.510% = $351 interest, so you will cash it in for $10351.

only paid out anually?

meh

Aren't most CDs paid out quarterly?

Depends on the CD. Some pay out monthly, some at maturity, some quarterly (this one I haven't seen too often).

 

[zimu]

my 2 cents: horrible idea. with the interest rates shooting up (i get an email from ING every month saying my rate has gone up) its really stupid to lock that much money into a CD with a pretty pathetic interest rate... if there's no big penalty to cancel the CD now, i'd strongly recommend it, and just stick it either in an ING savings account or check out this advertized 4% special on various forums.

 

[Shyatic]

Originally posted by: zimu
my 2 cents: horrible idea. with the interest rates shooting up (i get an email from ING every month saying my rate has gone up) its really stupid to lock that much money into a CD with a pretty pathetic interest rate... if there's no big penalty to cancel the CD now, i'd strongly recommend it, and just stick it either in an ING savings account or check out this advertized 4% special on various forums.

 

[tfinch2]

If you are looking for a safe investment, you should stick it into an INGdirect savings account. The interest rate is pretty much the same, plus you can get someone to refer you, have them make $25 and you make $25. Not to mention the rate keeps climbing, while the CD rate is locked.

 

[AMDZen]

Emigrant Direct is > * right now

Unless you are able to refer people and get the $10 (25$ from getting reffered) then its ING Direct.

Both have a higher interest rate then that right now, and with a regualr savings acount vs a CD where your money is tied down.

 

[DaShen]

Originally posted by: BlueWeasel

Originally posted by: Spooner

Originally posted by: Wizkid
3.450% (per year) but compounded daily (3.450% / 365 daily rate) averages to 3.510% annually.

You will get $10,000 x 3.510% = $351 interest, so you will cash it in for $10351.

only paid out anually?

meh

Aren't most CDs paid out quarterly?

No, It depends on the type you invest in.

This guy will get a $351 profit, but he can't touch the money for a full year.

 

[zebano]

Checkout the finance forum on fatwallet to find the best deals - that one sucks. Wizkid answered your question though.

 

[qaa541]

Yeah, you really didn't research well to get the most for your money. Fatwallet finance forums often have deals (sometimes up to 10% promos) on CDs which are far greater than what you got.
With 10K, I would have bought municipal bonds which are state and federal tax free. With the CD you bought, you will be taxed on that $351!

 

[mdchesne]

CDs and Saving accounts are awesome. I tabulated at the present interest on ym savings, if i somehow get $75,000 in it, i can make enough on interest per month to never work again and have enough for rent, food and gas

 

[Spooner]

oh well, i'll do something better with it next year

thanks for the info, fellas

 

[AMDZen]

Originally posted by: mdchesne
CDs and Saving accounts are awesome. I tabulated at the present interest on ym savings, if i somehow get $75,000 in it, i can make enough on interest per month to never work again and have enough for rent, food and gas

Please explain

$75,000 @ 4% would only be $3000 a year, what am I missing?

 

[mdchesne]

Originally posted by: AMDZen

Originally posted by: mdchesne
CDs and Saving accounts are awesome. I tabulated at the present interest on ym savings, if i somehow get $75,000 in it, i can make enough on interest per month to never work again and have enough for rent, food and gas

Please explain

$75,000 @ 4% would only be $3000 a year, what am I missing?

my rent is only 210 a month (awesome deal IMO), food is ~50 a month, and gas is only 40 cause i don't drive very far or often. so thats 300 a month. and i think my interest is 5% or something (local bank) so it averages out...or close to (but that's only if i had 75000 to drop in a bank. if i actually had that kind of money, it'd go to stocks)

75,000 * .05 = 3750 => 3750/12 = 312.5 per month. would have 12 a month extra for beer

 

[thomsbrain]

Originally posted by: mdchesne
CDs and Saving accounts are awesome. I tabulated at the present interest on ym savings, if i somehow get $75,000 in it, i can make enough on interest per month to never work again and have enough for rent, food and gas

um... try $1 million.

 

[mdchesne]

Originally posted by: thomsbrain

Originally posted by: mdchesne
CDs and Saving accounts are awesome. I tabulated at the present interest on ym savings, if i somehow get $75,000 in it, i can make enough on interest per month to never work again and have enough for rent, food and gas

um... try $1 million.

see previous post. math works out