What is APY and What Does It Mean?

Personal finance   •  March 30, 2022  •  5 mins read
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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:

https://www.flareaccount.com/

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Sources:

1. https://www.investopedia.com/terms/c/compoundinterest.asp

 

2. IMPORTANT INFORMATION FOR OPENING A NEW DEPOSIT ACCOUNT: To help the federal government fight the funding of terrorism and money laundering activities, the USA PATRIOT Act requires us to obtain, verify, and record information that identifies each person who opens an Account. WHAT THIS MEANS FOR YOU: When you open an Account, we will ask for your name, street address, date of birth, and government ID number. We may also ask to see a copy of your driver’s license or other documents at any time. All Accounts are opened subject to our ability to verify your identity by requiring acceptable types of identification. We may validate the information you provide to us to ensure we have a reasonable belief of your identity. If we are not able to verify your identity to our satisfaction, we will not open your Account or we may close the Account if it was previously funded. Your Account is subject to fraud prevention restrictions at any time, with or without notice.

 

3. Make up to $400 in fee-free cash withdrawals per day from your ACE Flare Account by MetaBank by using your debit card at participating ACE Cash Express locations. $400 total is calculated based on all withdrawals performed at all ACE Cash Express locations visited in a day. A direct deposit (no dollar minimum) to the account within the immediately preceding thirty-five (35) days is required. See store for details. Although this feature is available at no additional charge with qualifying direct deposit, certain other transaction fees and costs, terms, and conditions are associated with the use of this Account. Offer subject to change. This optional offer is not a MetaBank®, N.A., or Visa offer nor does MetaBank, N.A., or Visa endorse this offer.

 

4. The optional Savings Account linked to your Flare Account is made available to Accountholders through MetaBank, N.A., Member FDIC. Interest is calculated on the Average Daily Balance(s) of the Savings Account and is paid quarterly.

 

• If the Average Daily Balance is $2,000.00 or less, the interest rate paid on the entire balance will be 5.87% with an annual percentage yield (APY) of 6.00%.

 

• If the Average Daily Balance is more than $2,000.00, the interest rate paid on the portion of the Average Daily Balance which exceeds $2,000.00 will be 0.49% with an APY of 0.50%, and the interest paid on the portion of the Average Daily Balance which is $2,000.00 or less will be 5.87%. The APY for this tier will range from 6.00% to 0.60%, depending on the balance in the Account.

 

The interest rates and APYs of each tier may change. The APYs were accurate as of 4/1/2022. No minimum balance is required to open Savings Account or obtain the yield(s). However, you must receive direct deposit(s) totaling at least $500 within one (1) calendar month to be eligible to open a Savings Account. Savings Account funds are withdrawn through the Flare Account (maximum 6 such transfers per calendar month) and transaction fees could reduce the interest earned on the Savings Account. Funds on deposit are FDIC-insured through MetaBank, National Association, Member FDIC. For purposes of FDIC coverage limit, all funds held on deposit by the accountholder at MetaBank, National Association, will be aggregated up to the coverage limit, currently $250,000.00.

 

5. The Debit Card Overdraft Service is an optional service made available to eligible Flare Account customers by MetaBank, National Association. Once you enroll and meet the eligibility requirements, you will be charged $20.00 for each transaction that overdraws your account by more than $10.00, up to a maximum of five (5) fees per calendar month. To avoid that fee, you have twenty-four (24) hours from the time of the first transaction that creates the overdraft to bring your Account back to a zero ($0.00) or a positive balance. Transactions subject to an overdraft fee are signature and PIN purchase transactions and ATM transactions. ACH Debit transactions are not eligible for coverage. Any negative balance must be repaid within thirty (30) days. Whether we authorize an overdraft is discretionary, and we reserve the right not to pay. For example, we typically will not pay overdrafts if you fail to meet the eligibility requirements for this service or you attempt too many transactions or transactions that create too large of an overdraft. Call us at 866-753-6355 or log in to your Online Account Center for additional terms and conditions that apply, including initial and ongoing eligibility requirements for the service. This service is expensive, so we encourage you to research alternatives before enrolling. Once enrolled, you may opt-out at any time; however, you are responsible to repay any overdrawn amounts on your account even if you opt-out of the service. 

 

The ACE Flare® Account is a deposit account established by MetaBank®, National Association, Member FDIC. Netspend is a service provider to MetaBank, N.A. Certain products and services may be licensed under U.S. Patent Nos. 6,000,608 and 6,189,787.

 

This retailer engages in money transmission services as an authorized delegate of Netspend Corporation (NMLS #932678). State licenses, disclosures, and complaint information may be found here www.netspend.com/help/licenses.

 

The Flare Account® is a demand deposit account established by Pathward, National Association, Member FDIC, and the Flare Account Debit Card is issued by Pathward, N.A., pursuant to a license from Visa U.S.A. Inc. Netspend is a service provider to Pathward, N.A. Certain products and services may be licensed under U.S. Patent Nos. 6,000,608 and 6,189,787.