So I got a CD account a few months ago and I was told the interest rate was 4.22% and the APY was 4.03% for 4 months. After the 4 months, I got the mature balance, but I realized that the new balance did not have the 4.22% interest on it.
For this example, let’s say I put in $10K at the 4 month term with 4.22% interest and 4.03% APY. When it matures, I’m thinking I should have $10,422 roughly, but in reality I have $10,140 and it looks like it increased by 1.4%. Can someone explain why that is and how the rates work? I did try looking up the information, but the way they are written, it looks like it would have in theory increased by the % amount that it was locked in, so I’m lost on how this all works. Thank you in advance.
Comments
The interest rates and yields are expressed as annual rates, not a value for the life of the term.
You held the CD for less than one year, so the total yield is only a portion of that APY figure.