Calculating the End Balance

Posted By: Dr. Frugal in Saving on 09/13/2007 at 20:58:31

You can use the APY for more than just deciding which deposit products to pick--it can help you figure out what your ending balance will be at the end of a year's investment. Here's the formula, it's really simple: Balance*(1+APY)=Ending Balance.

If you plug in some numbers, like 10k as your beginning balance at .03557% you'll get $10,355.70. Difficult, I know.

It is important to note though that banks quote APY on deposit products even if the term is shorter or longer than a single year. The idea is to give you a tool to compare deposit products, not necessarily provide accurate quotes/ If the product has a one-year terms, then the APY will give you what it will earn over the term. However, if the product has a six-month term, the APY is not what you will earn in six months.


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