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Making sense of CD rates

By Sheyna Steiner · Bankrate.com
Wednesday, July 6, 2011
Posted: 12 pm ET

When it comes to evaluating CDs, the annual percentage yield is of paramount importance. In most cases, the APY is very easy to spot -- banks are required by law to display the annual percentage yield to help savers compare products.

APY takes into account both the nominal interest rate and compounding interest. The more frequently interest is credited to your account, the higher the annual percentage yield will be.

Interest can compound daily, weekly, monthly, quarterly or yearly -- however the bank or financial institution chooses to do it -- but the APY will provide all of that comparable information in one number.

One note of warning: the absence of references to a CD's APY can be a sign of a scam.

To ensure that savers have ample information when shopping for a CD, Bankrate's CD rate tables display the APY in addition to the nominal interest rate and how frequently interest is added to your account.

Start shopping for CDs now.

To learn more, read "What's the difference between APR and APY?"

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