Compounded CD - APY Disclosure

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Question:

Do you have to disclose an APY based on compounding when the customer requests a monthly interest check on a CD?

Answer:

You disclose the APY based on the terms that apply to the CD. If the customer decides to take interest disbursements, you don't change the APY calculation. If the CD terms make interest disbursements mandatory, you disclose on the basis that interest doesn't compound.

First published on BankersOnline.com 3/17/08