APR=3.20%, APY=3.25%
In order to achieve an APY of 3.25% you must have ability, on your own and outside USPSFCU, to compound your monthly interest (dividend) payouts at a rate of 3.20%. That is difficult to do today.
But many of us can reinvest those dividend payouts at a rate of 2.5%. This results in an APY interest rate on your USPSFCU principal of between 3.20% and 3.25%. That is still a very competitive APY for a two year CD, the highest available nationally at this time.
Where does it say that? I see âCompounding and Crediting - Dividends will be credited and compounded monthly for MISCA and Money Market Certificates and quarterly for all other certificates.â in this document:
Ken has the USPSFCU deal now on his front page. He states dividends are paid out monthly and do not automatically compound within your USPSFCU account. The monthly dividends are paid into your USPSFCU savings account or into your USPSFCU checking account if you have such an account and elect to receive dividends there.
Point is, there is no compounding at the APR=3.20% rate. Instead your dividends will compound at a slightly lower rate depending where you move them. Thus, your APY cannot be lower than 3.20%, but is unlikely actually to reach 3.25%. It will fall somewhere in between.
You do know thatâs an option for literally every CD from every bank?
USPSFCU is offering a 3.25% APY. Thus, obviously you can choose to have your dividends kept in the CD, even if their default option is to pay them out monthly.
This is no different than the occasional claims that at maturity you âhave to be mailed a paper check, no ACHââŚunless you have them deposit the money into your checking account and ACH it out from there.
I do not believe internal compounding is an option with this product. Ken explains that.
ETA
Telephoned USPSFCU. With this type of certificate internal compounding is not an option. They have available other certificate types which offer this option.
You open by mail after downloading application at their website. You must send in a copy of your driverâs license (both sides), a check for $10, and your American Philatelic Society receipt . . if youâre using APS membership to qualify.
At maturity of your CD they WILL move all proceeds to your USPSFCU savings. They do not insist on mailing you a check.
USPSFCU seem like nice folks and a good deal, but Iâm still leaning more in the direction of the Hanscom deal at this time only because it is five months shorter . . . and I like that.
The offer itself states â3.25% APYâ.
Kindly refer to my edited post, just above yours.
What is âinternal compoundingâ? Either there is compounding, or there isnât. And they clearly state a 3.25% APY.
It is impossible for a 3.2% interest rate to produce a 3.25% APY without compounding. Either you were told wrong, or they are blatantly guilty of false advertising.
(And Iâm not saying you were told wrong info, the name âMISCAâ - âmonthly income share certificate accountâ - would indicate monthly payouts.)
shinobi is absolutely correct in his edited post here. Go over to Kenâs site & read some of the reviews of this offer. After reading the whole review you should understand.
As I posted way up above âThere is no compounding of interestâ. USPSFCU is a âdifferent catâ.
Internal compounding happens when dividends are folded back into the certificate which gave rise to them in the first place. It is the most common sort of compounding, but is not available with this USPSFCU CD we are discussing. This leaves as the only options:
Well, you could spend the dividends 
. . . but seriously . .
when internal compounding is disallowed the only remaining compounding option is external compounding. This just means you withdraw the dividends from your USPSFCU savings each month and reinvest them into another account external to USPSFCU . . . where they earn interest, of course, but most likely not at an APR of 3.2% (though it is theoretically possible I suppose).
That externally generated interest is adjunctive to the interest earned at USPSFCU at an APR of 3.20%, effectively raising your APY a bit . . . but probably not all the way up to 3.25%.
My point is, either the account compounds to produce the stated APY, or it doesnt. If the interest rate of 3.2% doesnt compound, they might as well state an APY of 33.25% since thatâd be just as made up and meaningless as 3.25%.
Theyâre stating an APY for the account. Your personal finances are irrelevant to the account terms.
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Oh, I quite agree that when USPSFCU provides an APY of 3.25% for this account, instead of 3.20%, it is misleading and confusing. They should not be doing that. This same issue was raised by others over on Kenâs site.
But the situation is what it is. I doubt either of us would be successful calling them and ordering them to cease this practice for this particular account. I am content to accept their error and move on. Remonstrating with them, Iâm afraid, would be quixotic and quite fruitless.
Iâm with glitch99 on this. If the interest cannot be accumulated in the same CD account and earn its interest rate, then the CD doesnât feature compounded interest and its APY = nominal interest rate.
Any discussion of what happens to the interest after it is transferred out of the CD is irrelevant.
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Itâs neither misleading nor confusing. Itâs indisputably wrong, period. They should not be doing that, simply because no credit union should be doing something thatâs blatantly illegal.
But I am fairly certain a FDIC complaint would result in that extra .05% being paid for accounts opened under this false pretense.
Kindly let us know the outcome of your FDIC complaint. Iâm up to my neck in alligators here with sadly no time remaining to pursue such an action. Wishing you good fortune with it nevertheless as you move forward.
ETA
Just a teensy amendment to the above:
Since USPSFCU is a credit union, and not a bank, you would probably have more success directing your complaint to the NCUA, rather than to the FDIC.
Touche!
For what amounts to a hair over $4/month on a $100k deposit, Iâm not inclined to do anything. Unless someone can confirm that the membership terms includes the use of arbitration for dispute resolution, and the paperwork for this CD references 3.25% APY. Otherwise thereâs nothing to gain individually from pursuing it (yes, $4/month counts as ânothingâ).
Good news:
Hanscomâs 19 month CD special at 3.00% APY has survived the end of May and is holding, now showing a rate effectivity date of 6/1/2019.
How much longer will it be available? I dunno.
Here is the link to their rate page:
Also Thrive APY remains at 5.00%, as you can see.
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MapleMark is currently offering competitive rates on its 24-month (3.00% APY) and 18-month (2.80% APY) Certificates, which require a minimum $25k opening deposit.
**edit to add (per Ken) -
" At this time, only checking and savings accounts can be opened online, but MapleMark is anticipating a âsoftâ introduction of a site-wide online application within the next two weeks.
Currently, opening a Certificate can be done through a combination of phone calls (866.698.5760) and email transactions. (Note: the phone number listed on MapleMarkâs home page, 844.242.6980, isnât operational.) After contacting the Bank, PDF versions of the New Account Details, the New Owner/Signer Information, and the ACH Debit Authorization forms will be sent via an encrypted email. Once completed, these three forms can be attached to the original email and will be automatically sent as encrypted email when you click on âReply.â
Upon receipt of the completed documents, MapleMark will begin the account opening process and generate the necessary paperwork. The documentation will be sent via Docusign, an electronic document system that allows users to provide an electronic signature on forms
Certificates can also be opened in-branch at either of two Texas branches located in Dallas and Edgewood, or at the Tulsa, Oklahoma branch."
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NASA Federal Credit Union is currently offering a 9 month special Certificate at 2.60% APY with a 10K minimum deposit. New funds must be deposited by June 30.
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