need help understanding savings account interest?
Im looking into opening a savings account with bank of america. On the website it says that the nominal interest is 0.1% compounded daily and paid monthly. the APY is 0.1%.
At first glance I thought that I would get a 0.1% return off of my investment each business day and then at the end of each month that would add to my balance so I can get interest on my interest. So if I invested $5000 I could get $5 a day and if there were 20 business days in a given month that would be $100. Am I wrong thinking this way??
All the calculators I’ve tried have said that that means that it will draw $5 a year even if compounded daily. So which one is it? I feel kinda stupid right now lol
The rate is “Annual Percentage Yield” with annual meaning yearly. It already has the compounding taken into consideration. The difference between nominal and compounded isn’t significant when rates are this close to zero.
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