Want to earn a little extra money in your bank account? Your account’s Annual Percentage Yield (APY) may be able to help.
What is Annual Percentage Yield (APY)?
“Annual Percentage Yield” or “APY” is the real rate of return on your account when taking into account the effect of compounding interest.
What is Compound Interest?
Compound interest is interest that’s calculated on the principal of your savings account (the actual dollars in the account), including all the interest you earned in previous periods.1 Let’s say, for instance, you have $1,000 in your savings account, and your bank calculates interest annually with a 5% APY. In the first year, you earn $50 in interest on your $1,000 principal, bringing your total balance with interest to $1,050.
In the following year, your institution will calculate your interest based on the new total of $1,050, not just the original principal of $1,000.
That’s compounding interest in action. That’s different from simple interest, in which you would continue to earn interest only on the initial principal amount deposited in the account.
What is High-Yield APY?
Have you heard of high yield savings accounts? These accounts offer an APY that is significantly higher than the average APY on savings accounts. Accounts with a higher yield allow your money to grow faster. By putting money away in a high-yield savings account that compounds interest, you can amplify your savings over time. Continue adding money to your savings account to grow those funds even more. You can research different high-yield savings account options to find out how to get the most from your savings efforts.
Don’t have a bank account? You can still take advantage of a competitive APY offered by the ACE Flare® Account by MetaBank®.2 The Flare Account was designed to be accessible online and offers many of the benefits of a brick and mortar bank account.
When you open a Flare Account, you’ll get access to no-fee3 cash withdrawals up to $400 per day at participating ACE Cash Express locations, if you enroll and receive qualifying direct deposit. If you enroll in direct deposit of $500 or more, you’ll also get access to:
- An optional Savings Account that earns up to 6.00% APY4
- Optional Debit Card Overdraft Service, subject to minimum direct deposit requirements5
There’s even more to love about the Flare Account. Learn more at the link below: