How does NFCU dividends or any dividends for that matter work?

[Anonymous]

I've been doing some reading and googling, but I'm still a little confused. NFCU pays 0.40% for a checking balance of 10k and up. So how much would 12k earn in a month if it was at that rate? Sorry if it's on the wrong portion of the board. I figure it's a personal finance type of question and posted it here. It's compounded/monthly. Thanks in advance!

[Gmood1]

With other credit unions offering 5 to 10 times that rate. I wouldn't even consider NFCU for these types of accounts. Here's a website to compare https://www.depositaccounts.com/checking/reward-checking-accounts.html .

You're looking at about $48 return for the year, compared to other CUs giving you
$200 to $500 back a year for the same amount.

[Anonymous]

Wow, that's a big difference! I'm going to give those other CUs a look. Thank you!

[OldFatJarhead]

Just be sure to read the fine print on the accounts do some deeper analysis in your comparisons. Many of those high-interest checking accounts require you to have a certain number/amount of debit card transactions a month to get the higher rates and no fees. Do the math. If you're someone who spends more than they save (aka: most people), you very well might do better doing all your card transactions on a cashback card and holding your cash in a lower-interest account.

[OldFatJarhead]

Also, to answer your question:  NFCU's .40 rate you quoted is the annual rate. So at the end of the month, they'll take your average daily balance (sum of each day's closing balance divided by the number of days in the month), then multiply that by the rate divided by 12. So .40%/12, or .0003333... So your $10k would earn you a dividend of $3.33/month.