Savings account help

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dynacraze,

My online savings account is at EmigrantDirect. They compound my interest daily, but only credit it to my account monthly. If you were simply making a 1 time deposit of $5,000 you'd earn (APY/365)*$5,000 each day. The interest earned would be credited to your account at then end of the month and then you'd make (APY/365)*($5,000 + Interest from Month 1) throughout the second month...

I'd imagine HSBC and ING calculate the interest on their savings account the same way, but you'd probably want to check their FAQ's to make sure.

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actually it would be your rate, not your APY. The APY is what you end up with after a year due to the compounding.

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Thanks for the correction - I guess I had APR and APY mixed up...

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APR and APY essentially are the same thing. APR (Annual Percentage Rate) is used to describe the interest a borrower pays. APY (Annual Percentage Yield) describes interest earned.

The nice thing about these terms is they take into account the compounding affect. It makes rates easy to compare so you don't have to figure out if rate X compounded monthly is better than rate Y compounded daily.