Membership Share Savings Account

Absolutely! Most members open a Membership Savings ($5 to join) + Basic Checking for the perfect combo.

APY stands for Annual Percentage Yield. It is a measure of the total amount of interest earned on an account based on the interest rate and the frequency of compounding over a year. APY is a useful metric for comparing the annual earnings on different savings products, such as savings accounts, CDs, and money market accounts, because it standardizes the effect of compounding. Key Points About APY

• Includes Compounding: APY accounts for how often interest is compounded (e.g., daily, monthly, quarterly), which can significantly affect the total interest earned over time.
• Comparison Tool: APY provides a standard way to compare the annual interest earnings of different savings products, regardless of how frequently interest is compounded.
• Formula: The formula for calculating APY is:

  APY = (1 + r/n)^n - 1

  where r is the nominal interest rate (expressed as a decimal), and n is the number of compounding periods per year.
• Higher APY: A higher APY indicates that you will earn more interest on your money over a year, assuming the same principal amount.

Example For example, if a savings account offers an interest rate of 5% compounded monthly, the APY would be higher than 5% due to the effect of monthly compounding. This makes APY a useful metric for comparing the real return on different financial products.

When you’re comparing savings accounts, CDs, or other financial products, you’ll often see two numbers: an interest rate (or dividend rate, if it’s a credit union account) and an Annual Percentage Yield (APY). At first glance, they might seem like the same thing—but they’re not. Knowing the difference helps you make smarter financial choices, whether you’re opening a savings account or making a long-term investment. Let’s break it down.

Interest Rate or Dividend Rate: the Base Number

Interest Rate

The interest rate is the basic percentage a bank or credit union uses to calculate how much you’ll pay on a loan or earn on a deposit, before considering how often interest is added (compounded). Let’s say you open a credit union savings account with an interest rate of 3.00%. That’s the base rate your money earns before compounding is applied.

Dividend Rate

At a credit union, the term "dividend rate" is often used instead of "interest rate" for deposit accounts. As a member-owner, you’re technically receiving a share of the credit union’s earnings—similar to a dividend from a company. Functionally, though, the dividend rate works the same way as an interest rate on a bank account.

Annual Percentage: the Full Picture of Earnings or Costs

Annual Percentage Yield (APY)

APY shows how much you earn in a year on deposits, including the effects of compounding. Compounding is the process of earning interest on your interest (for deposits) or being charged interest on interest (for loans).  If your account compounds interest daily or monthly, you’ll earn a bit more than the base rate, because you start earning interest on the interest that’s already been added. That extra boost from compounding is why the APY is slightly higher than the interest/dividend rate.

Compounding Interest: Dividend Rate vs APY

APY provides a clearer picture of the actual annual earnings from savings accounts, money markets, and certificates because it includes compounding. For loans, APR is the more accurate number for comparing costs between offers, because it reflects compounding as well as fees.

• Interest Rate/Dividend Rate: If a savings account offers a 5% interest rate compounded monthly, the nominal rate is 5%. This is the base number for how much your balance will grow before compounding.
• APY: When considering the monthly compounding, the same account will have an APY slightly higher than 5% because the interest earned each month also earns interest in subsequent months.

Comparing Financial Offers Using APY

If you only look at the interest or dividend rate, you might think two products are equal—but differences in compounding or fees can make one clearly better for your wallet. A savings account with a slightly lower rate but daily compounding could earn you more than one with a higher rate but annual compounding.

Interest Rate vs APY Example

Always use APY when comparing savings products from different institutions. Knowing the difference between the base rate and APY helps you see the full picture, allowing you to make confident choices—whether you’re saving for a big purchase or making long-term investments. Let’s compare two savings accounts:  

Account	Dividend/ Interest Rate	Compounding	APY
A	3.00%	Annual	3.00%
B	3.00%	Monthly	3.04%

Both accounts have the same base rate, but because Account B compounds monthly, the APY is slightly higher. That’s the effect of compounding.

Let Us Help You With the Next Big Stage of Your Life

At People Driven Credit Union, we’re dedicated to helping you achieve your financial goals. As a member-owned financial institution, we’re literally invested in your future—and stand behind our commitment to transparency, security, and service excellence. Become a member and open an account today!  

1. How often are dividends compounded?

Dividends on savings, money market accounts, and certificates are typically compounded and credited monthly unless otherwise stated in the account disclosure. Compounding helps your balance grow by earning dividends on previously earned dividends.

2. Why is the APY higher than the dividend rate on a certificate?

The dividend rate is the base rate used to calculate earnings. APY shows what you actually earn over a year, including compounding. Because dividends are compounded, the APY is slightly higher than the dividend rate.

3. What is the difference between APY and APR?

APY applies to deposit accounts and shows how much you earn in a year. APR applies to loans and shows the total yearly cost of borrowing, including certain fees. Use APY when comparing savings products and APR when comparing loans.

4. Does compounding frequency really make a difference?

Yes. The more often dividends are compounded, the sooner you begin earning dividends on previously earned dividends. Over time, even small differences can increase your total earnings.

5. When comparing accounts, should I look at the dividend rate or APY?

APY is the better number to compare. It reflects the total amount you can expect to earn over a year, including compounding, giving you a clearer picture of your true return.

Gone are the days when you had to visit a branch to deposit your checks. With People Driven Credit Union’s mobile check deposit service, managing your finances becomes a breeze. This technology, known as remote deposit capture, lets you deposit checks from anywhere by simply snapping a picture with your device. How Mobile Check Deposit Works:

1. Set the Stage: Place your check against a dark background to ensure all details are captured clearly due to the contrast.
2. Sign and Specify: Endorse the back of the check and write “For Mobile Deposit Only to PDCU” along with your clear signature and account number to streamline processing.
3. Open the MyPDCU App: Log in and select "Deposits."
4. Enter the Check Details: Enter the check amount and select the account where you want to deposit it.
5. Capture the Check Images: Place the front of the check within the phone's frame and tap the screen to capture an image. Repeat for the back of the check.
6. Verify the Deposit: Check your transaction history in the app to ensure the deposit was successful.
7. Secure Disposal: After confirming the deposit, cut up the check to secure your personal information. Dispose of the pieces separately.

The check will be deposited into the requested account and become available according to our standard check processing timeline. Past deposits can be viewed in the app. For additional details, please visit our website at peopledrivencu.org/amazing or contact us if you have questions. Embrace simplicity and security with our digital banking solutions. At People Driven Credit Union, we're here to make your financial management effortless.

Most members pay nothing for monthly statements by selecting digital delivery to get eStatements at no cost. We charge $5 per month for paper statements mailed to your home. Members under 23 years old receive paper statements free.

5 Helpful Hints About Monthly Statements

1. Switch to eStatements today to avoid the $5 monthly paper fee.
2. Check your current preference in the MyPDCU app or website.
3. Make sure your email address is up to date in your profile.
4. Download and save each statement for your records.
5. Contact us at 248-263-4100 if you want paper statements or have questions.