Can you run through it step by step cause this APR and APY is confusion to me........I still can't see how much interest I earn monthly?? help please sign confused but want to learn

so what i get when i invest $5000.00 by a 3.50 APY daily or by the same APY but monthly or yearly what is better for me?

--- APY has already taken into account the compounding. I think you are confusing APY and APR. 5000 invested with a 3.50 APY would give you 175 of interest earned over a year when you invest 5000. The investment companies will tell u the APY cuz it is bigger than APR. APR is say 10% but this doesnt take in that the 10% is compounded. if 10% APR and compounded monthly it is really a APY of 10.47131 = ((1+.10/12)^12)-1 .10 is cuz 10% APR and 12 is how many times a year it is compounded (monthly so 12). APY is what banks say u get cuz they want to appear like they give you more interest on the money you have in your accounts with them. Whereas the credit card companies want to appear like u have to pay less on what you owe to them so they give you the APR (which is lower..remember the 10% from above), but you really are paying the APY(10.47131%). the credit card company doesnt want to tell u that u are going to pay 10.47131% so they say 10%. the APY that you have to pay credit card companies is usually called the EAR, not the APY. APY is what banks give you and EAR is what you pay the credit card companies, but they are calculated the same way.

so what i get when i invest $5000.00 by a 3.50 APY daily or by the same APY but monthly or yearly what is better for me?

Is there a situation in which APY could be a bad thing?

APY means annual percentage yield. this is the effective interest rate, meaning how much you actually earn after your interest is compounded. compounding is just earning interest off of your interest, so if your money is compounded daily, each day your earnings + interest from yesterday are added together to create a new number, and this newer bigger number is the number you are earning interest on today. make sense?

so say you put away $100. with an interest rate of 10% you would end up with $110 after a year. (100 x .10 = 10, total 110) but if your interest is is compounded daily [ 1 + (.10/365] to the power of 365 leaves you with an APY of 10.52%, so your $100 turns into $110.52 after a year when the interest is compounded daily.

when they quote you a regular interest rate it doesn't take compounding into account so its never an accurate number. what number they advertise depends on what you're doing with your money. if you are borrowing money from the bank they quote you a regular interest rate because it looks lower so you think you have

to pay less - they trick you cuz they compound your loan and you end up paying more than you thought, but if you are investing your money in that bank they readily quote you the APY because it looks bigger.

how is APY different from interest rates?

How did you come up with the $172.02 amount? Please post your calculations.

Assuming monthly compounding, 5.25 APY is approximately 5.13 APR. On a 4-month CD, you would receive $172.02 in interest.

If a 4-month bank CD has an annual percentage yield (APY) of 5.25% and an amount of $10,000 is invested in the CD, what is the actual dollar amount that would be received at the end of the 4-month period? Is the 5.25% prorated for the 4-month period only or is the amount actually 5.25% even though it is referred to as "annual" percentage yield?

Thank you for your help.