Which CD rate is better-a 91 day simple at 3.16% interest & 3.20 APY, or a 4 month daily at 2.86% & 2.90 APY?

Question

Which CD rate is better-a 91 day simple at 3.16% interest & 3.20 APY, or a 4 month daily at 2.86% & 2.90 APY?

Answer 1

All you need to do is look at the APY which tells you how much you'd actually make in one year based on the interest rate and after compounding.  An APY of 3.20 is obviously better than 2.90.

Answer 2

They are both almost the same

Take 1000.00 after 3 months.

91 Day Simple @ 3.16 = 1,007.90

Daily 2.86 = 1,007.28 after 91 days

Based on this take the 91 day simple.

Answer 3

That depends upon how much money you are investing and what the ultimate use of the money is.

Big money lesson number one:  don't sweat the small stuff.  These are both short term interest rates (less than a year) and the differences are so small as to make the actual difference in interest received in dollars & cents irrelevant unless you are investing large amounts of money (millions).  Do the math to confirm (always do the math) but take the shorter rate and don't waste time debating over choices that will have no material impact on your net wealth balance in the long run.  It is a waste of time.