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Chemical Bank, based in Midland, Michigan, sent me an email promotion for an 18-month CD. The “Annual percentage yield” is stated as 1.75%. I assume (perhaps incorrectly) that this yield is based on some type of compounding and that the actual rate is a little less. The promo doesn’t make that clear. Minimum $100.
Unlikely I’ll bite on the offer. Must say, however, am surprised an 18-month CD pays that much.
Pretty good Hank. I see a few 18m options between 1.75% - 1.8% according to Bankrate.com. 1 year isn't far behind. I'm happy right now with money market accounts at about 1.3%
APY is a legally mandated term of art. As @hank wrote, it's the amount of interest (including compounding) you get each year. Think of it as annual simple interest.
My go-to site for bank rates is depositaccounts.com. For Michigan, what appears to be the best rate is 1.80% for a 15 month CD at Isabella Bank. Aside from having a shorter term than 18 months (good in a rising rate environment), it's a bump-up CD. So you get one shot at increasing the yield if the bank rates go up - again better in a rising rate environment.
Last I checked Wall Street had a 85% probability of a December rate hike which translates into CD rates creeping up slowly through 2/2018 with credit unions offering improving rates slightly ahead of that curve.
That's why the bump-up rate CD I mentioned is particularly attractive. A bump-up feature is rarely useful, but it can provide interest rate protection especially if/when there are subsequent rate hikes during the CD's 15 month term.
Regarding APY ... seen on a Citibank window: 1.00% promotional rate, 0.31% APY. That's because the rate only lasts 90 days, and then drops down to Citi's usual anemic rates. So the the value of your account will be only 0.31% higher at the end of the year (including compounding). APY is really the only number to pay attention to.
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Pretty good Hank. I see a few 18m options between 1.75% - 1.8% according to Bankrate.com. 1 year isn't far behind. I'm happy right now with money market accounts at about 1.3%
http://www.bankrate.com/partners/sem/cd-rates-v9?gclid=Cj0KCQiAlpDQBRDmARIsAAW6-DMWPm2knNC7yinnTt2L9beYfAxOTeVxbbd5toFwU0m58V8jifVdMacaAkblEALw_wcB&prods=15,16,18,19,26,500&ec_id=m1027719&s_kwcid=AL!1325!3!211242027528!e!!g!!bankrate&ef_id=WbqoHQAAAFeyqHCP:20171109174845:s
My go-to site for bank rates is depositaccounts.com. For Michigan, what appears to be the best rate is 1.80% for a 15 month CD at Isabella Bank. Aside from having a shorter term than 18 months (good in a rising rate environment), it's a bump-up CD. So you get one shot at increasing the yield if the bank rates go up - again better in a rising rate environment.
https://www.depositaccounts.com/banks/isabella-bank/offers/
Regarding APY ... seen on a Citibank window: 1.00% promotional rate, 0.31% APY. That's because the rate only lasts 90 days, and then drops down to Citi's usual anemic rates. So the the value of your account will be only 0.31% higher at the end of the year (including compounding). APY is really the only number to pay attention to.