Kokua Line
Kokua Line
Question: May I request an explanation of the term Annual Percentage Yield as used by financial institutions and why/ how it is used in conjunction with the term "percentage rate?" Is there a formula using the APY that can give me the total interest gained for any principal deposited for any term? Or is the compounding factor also required? Is there anything official that dictates to financial institutions a standard in the application of the term APY? Interest rates
compound confusionAnswer: In 1993, depository institutions were required to comply with the federal Truth in Savings Act (TISA, aka Regulation DD), a disclosure law allowing consumers to compare rates for checking, savings and consumer deposit accounts among the different financial institutions, said Stafford Kiguchi, spokesman for the Bank of Hawaii, who also explained how the APY works.
The APY is a required disclosure when quoting rates on consumer deposit accounts, he said, adding that it is defined as "a percentage rate reflecting the total amount of interest paid on an account, based on the interest rate and the frequency of compounding for a 365-day period."
Depending on the type of account involved, different compounding factors are used, he said.
"For instance, some accounts compound daily, others compound quarterly or semi-annually," he said. "The interest rate is the percentage paid on the principal balance, and the APY is an annualized rate which accounts for the compounding."
For example: $2,000 deposited at an interest rate of 2 percent, compounded daily, would have an annual percentage yield of 2.02 percent, he said.
Kiguchi also noted that APYs typically are based on no withdrawal of credited interest and no change in the interest rate for a full year. "If the account is subject to a variable interest rate that would also affect the APY," he said.
Check with your financial institution regarding calculating interest earnings or check this Web site: http://www.apyserver.com/FutureValue.asp, where you can calculate interest earned using various rates and terms.
Lost keys?
To the lady who lost her keys while running to catch the Salt Lake city bus around 6 p.m. on Friday at Alakea and Hotel streets in front of District Court: I turned in your keys to the sheriff on the first floor of the courthouse. -- Anonymous
Auwe
Can anything be done about the drinking that goes on between midnight and 4 a.m. on Halawa Valley Street? A group of individuals have been getting together at least four times a week in the former Grace Pacific employee parking lot and lunch pavilion. This group consists of anywhere between 5-10 cars and they leave behind a mess. Groups also get together in front of the entrance to the animal quarantine station and under the H-3 overpass. We've tried calling police but it continues to happen.(Police have been monitoring the area and did observe a group last weekend and spoke with them, Honolulu Police Department spokeswoman Michelle Yu said. If this happens again, she said to call 911.)
Got a question or complaint?
Call 529-4773, fax 529-4750, or write to Kokua Line,
Honolulu Star-Bulletin, 500 Ala Moana Blvd., No. 7-210,
Honolulu 96813. As many as possible will be answered.
Email to kokualine@starbulletin.com