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Savings Returns - SO CONFUSED help please lol

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Savings Returns - SO CONFUSED help please lol

I feel extremely silly asking this but here goes.  I'm considering opening a savings that will offer some return over just saving cash.  I've seen posts about that 6.17% DCU savings for up to $1000 and just wondering if that means after one year you will have earned an extra $60 ish dollars? Or are there other variables or daily accruing interest that apply as well? On their site it lists 6.17 APY and something about .25 daily and 6 percent something else and none of that helped me and I have a hard time talking over the phone with institutions especially when I'm asking what I feel is a dumb question.  Can someone hold my hand here and explain what these things mean pretty please? Thank you!!!

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Community Leader
Super Contributor

Re: Savings Returns - SO CONFUSED help please lol

@Azrael-Luna ...you're not alone, trust me. Hope this helps! Smiley Happy

 

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Message 2 of 11
Contributor

Re: Savings Returns - SO CONFUSED help please lol

Thank you!

Message 3 of 11
Community Leader
Super Contributor

Re: Savings Returns - SO CONFUSED help please lol

OP, anything concerning YOUR money should never, ever feel like a silly question to ask. So ask away and do not care what a CSR may think. If one doesn’t ask a question, how would one know the answer?

Yes, if you keep your $1K in for the 1-year term, you would earn $60.

I found out yesterday about DCU and will open a savings account too.
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Message 4 of 11
Frequent Contributor

Re: Savings Returns - SO CONFUSED help please lol

$61.70 to be more precise.

 

I check this site https://www.depositaccounts.com/savings/ every now and again, or just google high yield savings accounts.  I have many savings/money market accounts open.  I try to earn at least 4% on everything, but have had to open a 3% one recently, as I have used up the higher ones that I am able to become a member of. (I avoid any that have debit card usage tied to APY because I use rewards credit cards for all purchases as most on this board probably do.)




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Message 5 of 11
Community Leader
Super Contributor

Re: Savings Returns - SO CONFUSED help please lol


@Workin4abetterFICO wrote:

$61.70 to be more precise.

 

I check this site https://www.depositaccounts.com/savings/ every now and again, or just google high yield savings accounts.  I have many savings/money market accounts open.  I try to earn at least 4% on everything, but have had to open a 3% one recently, as I have used up the higher ones that I am able to become a member of. (I avoid any that have debit card usage tied to APY because I use rewards credit cards for all purchases as most on this board probably do.)


Thanks for the link and correction. Really appreciate it. 

GOALS: Garden til APR 2020 and 800 Club


SEP 2019: EX 791, TU 797, EQ 800
JUN 2019: EX 788, TU 794, EQ 779
DEC 2018: EX 777, TU 783, EQ 799

|| AmX Cash Magnet $25K || NFCU CashRewards $20K || Macy's $20K || Discover IT $18.7K || NFCU CLOC $15K || NFCU Platinum $12.5K || AmX ED $11.5K || CitiCostco $7K || CitiDC $6.3K ||
Message 6 of 11
Super Contributor

Re: Savings Returns - SO CONFUSED help please lol


@Azrael-Luna wrote:

I feel extremely silly asking this but here goes.  I'm considering opening a savings that will offer some return over just saving cash.  I've seen posts about that 6.17% DCU savings for up to $1000 and just wondering if that means after one year you will have earned an extra $60 ish dollars? Or are there other variables or daily accruing interest that apply as well? On their site it lists 6.17 APY and something about .25 daily and 6 percent something else and none of that helped me and I have a hard time talking over the phone with institutions especially when I'm asking what I feel is a dumb question.  Can someone hold my hand here and explain what these things mean pretty please? Thank you!!!


It's good that other people are helping you understand how interest works.

 

One thing that should be part of your financial plan is to look at how much cash you will have on average for savings.  You mention $1000 -- is that a goal you hope to achieve, or are you already well over that?

Message 7 of 11
Contributor

Re: Savings Returns - SO CONFUSED help please lol

Definitely not there yet, just had to deplete our extras to replace a car (we only buy cash/used and lost both of our older cars to cylinder failure a month apart Smiley Sad  ).  Would like to go beyond $1000 but that is the current first goal.  Trying to think ahead on the best ways to maximize.

Message 8 of 11
Established Member

Re: Savings Returns - SO CONFUSED help please lol

First of all, congratulations. I've been lurking for a long time on this forum, and this thread made me finally sign up so I could contribute.

 

It took me a while to work out what was going on with all the numbers on the DCU site too, but I finally managed to get a straight answer. I hope this makes sense...

 

The 6.17% is annual percentage yield. Multiply your balance by 1 plus this number, and this will be the balance you would expect to get after one year. For example, $1000 x 1.0617 = $1061.70.

 

However, you're actually paid at the dividend rate, which for DCU is 6.00%. If you divide this number by 12, you get 0.5%. Multiply your starting balance by this number, and you'll get your monthly interest. $1000 x 1.005 = $5. Do this 12 times, and you come up with this (sorry, a little more complicated formula)... $1000 x (1.005^12) = $1061.68, or basically the value from the first paragraph (rounded to one decimal place).

 

Another however... if you deposit $1000 into DCU (or any other CU that has this kind of offer), you will NOT get this exact return. This is because the above two calculations work on the assumption that the whole balance gains interest at the specified rate. In the case of DCU, any balance over $1000 gains interest at 0.25%. So, in the beginning, you have a $1000 balance. After one month, you have $1005. After the second month, you have $1010, not the $1010.03 that you would expect - $5 gets interest at the lower 0.25%. It's not major, but after the year you basically end up with $60 instead of the $61.70 that you'd expect from just using the APY value.

 

On a different note, @Workin4abetterFICO - I'd be interested to see where you have high yield accounts, if you don't mind. I have a few opened (some geo-fenced, some nationwide), and a couple more on my radar. I'd like to compare notes and see if I've missed any, or if I should steer clear of any that seem too good to be true.

 

Message 9 of 11
Frequent Contributor

Re: Savings Returns - SO CONFUSED help please lol

You can also check out this summary of high yield accounts to get:

 

https://www.doctorofcredit.com/high-interest-savings-to-get/




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