12 Additional Features
This topic provides the functional description of Oracle Banking Retail Accounts for Interest and Charges.
Annual Percentage Yield (APY)
Annual percentage yield (APY) is a normalized representation of an interest rate, based on a compounding period of one year. APY figures allow for a reasonable, single-point comparison of different offerings with varying compounding schedules. However, it does not account for the possibility of account fees affecting the net gain. In US, Banks publish APY in their product brochures or websites.
Note:
In the situation where the customer is receiving a one-time exception rate on an account over the rate posted, they do not need to be provided the APY at account opening. They will see the effect of the upgraded rate and APYE displayed on their periodic account statement.Annual Percentage Yield Earned (APYE)
Truth-In-savings Act in US, requires certain disclosures on periodic statements. One of the disclosures required on dividend-bearing accounts is the “annual percentage yield earned,” or APYE. The APYE is an annualized rate that reflects the relationship between the amount of dividends actually paid to the member’s account during the period and the average daily balance in the account for that period.
The general formula is as follows : 100 [(1 + (Dividends earned ¸Balance)) 365¸ days in period - 1 ] = APYE Balance = the average daily balance in the account for the period Dividends earned = the actual amount of dividends earned for the period Days in period = the actual number of days over which the dividends disclosed on the statement were earned.
Daily Compounding
The Interest Accruals and Application process have the facility to support Accruing Interest on a daily compounding method and to be applied to the customer account on the frequency configured at Interest product.