CD Maturity Value Wrong?
I bought a $1,000 CD (actually a lot more) with a stated 5% APY on July 3,2024.
I assumed the maturity value would be $1,050. The bank shows a maturity value of 1,049.93 on Jul 3,2035. A minor difference, but why?
The bank stated it was because 2024 is a leap year. But, the buy was in July so leap year is not a factor and the 5% APY was established in May 2024.
Any thoughts?
4 Replies
That's just the way it's done sometimes. The CD started in a leap year so the base number of days is 366. But it matured in 365 days. Another method might be 30 days in a month, 360 days in the year.
Thanks for the respnse.
I thought that might be the case and if so, I think it is not only misleading but may violate some state of local law.
Fact: Rate was established after 2/29 so CD will be held for 365 days and nowhere could I find on the bank site state that annual means 366 days.
Question: If a 12 month CD was bought in July 2023 it will have been in effect 366 days unless it matures a day "earlier'. If not, would the maturity value be a bit larger than the nominal APY?
I'll loan you the .07$
I hope you're joking.
