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Certificate of Deposit Questions
Posted on 7/16/09 at 10:36 am
Posted on 7/16/09 at 10:36 am
I am looking to buy some CD's but have no clue what I am doing. I have tried researching on the interweb but still dont get it......
Say I put $1000 into a 6 month CD with a .80% interest rate and with a .80% APY, How much will I make after the CD matures.
Also is there an easy way given the interest rate and APY that I can determine how much return I will get for my investment?
Any advice would be greatyl appreciated.
Say I put $1000 into a 6 month CD with a .80% interest rate and with a .80% APY, How much will I make after the CD matures.
Also is there an easy way given the interest rate and APY that I can determine how much return I will get for my investment?
Any advice would be greatyl appreciated.
1
Posted on 7/16/09 at 10:40 am to SkoalCan
Multiply the APY times the face amount of the CD. For a six month CD, you would then have to divide the result you get by 2, since the maturity is for half a year. APY means Annual Percent Yield.
$1,000 X .8% = $8 / 2 = $4 interest. You would receive a check for $1,004 in six months, give or take a few pennies.
$1,000 X .8% = $8 / 2 = $4 interest. You would receive a check for $1,004 in six months, give or take a few pennies.
Posted on 7/16/09 at 10:45 am to LSURussian
quote:
$1,000 X .8% = $8 / 2 = $4 interest. You would receive a check for $1,004 in six months, give or take a few pennies.
your transaction costs are probably higher than that $4.
Posted on 7/16/09 at 10:48 am to MileHigh
Yeah, I started to add a comment about not spending it all in one place, but I didn't want to appear to be stirring things up.... 
Besides, the OP just used $1,000 as an example. For all we know, he might have much more to put into the CD.
Posted on 7/16/09 at 10:51 am to LSURussian
I was just using $1000 as an example for me to better understand. I have much more saved up currently from the deployment I am on.
Thanks for the help!
Thanks for the help!
Posted on 7/16/09 at 10:57 am to LSURussian
quote:
You would receive a check for $1,004 in six months, give or take a few pennies.
Actually, most CDs just roll over to a new CD at the end of the term. You have a 10-day window typically to come into the bank and take your money out, and if you do not, it will roll over into another CD of the same term at the current rate.
To the OP, if you're getting a CD paying .8%, then you need to do some more looking, because that rate is poo.
Posted on 7/16/09 at 1:00 pm to JPLSU1981
quote:True, but that was not the original poster's question.
Actually, most CDs just roll over to a new CD at the end of the term.
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