The Briefing Room
General Category => Economy/Business => Topic started by: pjohns on June 06, 2017, 06:35:43 pm
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Has anyone else noticed just how cynical the banks can be?
Just today, I received in the mail two offers, from different banks: One offered a loan at a certain Annual Percentage Rate (APR). This is in keeping with what I grew up with.
The other offered a savings account with a certain Annual Percentage Yield (APY).
To compare the two is like comparing apples with oranges, since one takes into account compounded interest, whereas the other does not.
Presumably, these folks are just hoping that no one will notice the difference...
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If there is one group of people more dishonest then used car salesmen its the bankers.
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Interest doesn't "compound" on a loan...unless you don't make your payments.
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Interest doesn't "compound" on a loan...unless you don't make your payments.
If a loan is for, say, $10,000, and the APR is 3 percent, then that is more than the $300 that it would be if we just used APY to calculate.
Or do you believe that APR and APY are identical?
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Pretty much every quote I see for MM savings accounts or CD's adds the "APY" % to make the current pathetic interest rates seem a tiny bit better (Yellen! *****rollingeyes*****). They used to just quote "APR" in the past.
BTW: 1 year $10K simple interest loan at 3% equals $163.24 in interest charges.
http://www.bankrate.com/calculators/mortgages/loan-calculator.aspx?loanAmount=10000&years=1.000&terms=12&interestRate=3.000&loanStartDate=08+Jun+2017&email=&lightbox=true&show=true&showRt=false&prods=388&monthlyAdditionalAmount=0&yearlyAdditionalAmount=0&yearlyPaymentMonth=+Jun+&oneTimeAdditionalPayment=0&oneTimeAdditionalPaymentInMY=+Jun+2017&ic_id=mtg_loan_calc_amortization_btn
and current savings rates:
http://www.bankrate.com/banking/money-market/rates/?ic_id=rates-results_savings_global-nav_banking_money-market-rates
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Interest doesn't "compound" on a loan...unless you don't make your payments.
Unless you're paying on a daily basis, it does compound.