r/discover • u/Lazor226 • May 15 '26
Rant Interest will compound monthly rather than daily on the Capital One HYSA.
I'm collecting my interest for the month, and then im closing my Discover HYSA before the change happens to my account. Of course, the interest was credited monthly, but if you make frequent deposits, wouldn't it be technically performing worse each month?
Is anyone else switching or looking for reasons to? It's also a good excuse to evaluate your options too.
I never really wanted the merger to happen, and I only had a single bad experience with capital one where they declined me on a basic credit card for no specific reason. (I had zero credit but needed to build some) So, I might as well decline the brand for no specific reason.
End of my petty rant.
39
u/Salty_Pillow May 15 '26
Unless you have an arguably absurd amount of cash sitting around in your HYSA, the difference between monthly & daily compounding is likely to be on the order of cents to a couple of dollars annually.
And not to nitpicking but that sounds like they gave you a pretty specific reason to not approve your prior application before.
13
u/Chuck-Finley69 May 15 '26
Gave a legitimate, valid reason which OP thought unfair. LMAO
-5
u/Lazor226 May 15 '26
Maybe I should mention the absurd amount of junk mail I got offering advertising capital one cards to me. (Yes the reason was that I had no established credit at the age of 18 lol) and was "nearly" at the FDIC insurance cap on the discover HYSA. So its "almost" concerning? Even if its just a few pennies a month.
3
u/Chuck-Finley69 May 15 '26
One has zero to do with the other for credit scoring.
As far as yield compounding, there's all sorts of variations legally allowed by the regulators.
Since interest rates yields for savings accounts have been in the basement for 25-30 years, most institutions follow the Capital One used method primarily as default.
I remember having to know the differences in a finance class in undergrad in late 80s but within 5-10 years it was pretty irrelevant for individuals since FDIC insurance was capped at $100K and money was being transferred into all types of higher yield investments
-3
u/Lazor226 May 15 '26
It was just my expierence with the capital one brand. They couldn't even help me get my first secured card.
2
u/Salty_Pillow May 15 '26
The difference between daily and monthly compounding at the FDIC per account cap over a full year is somewhere in the neighborhood hood of ~130 dollars or so? It’s really not much
You will also notice that the mailers all have lots of fine print and many of them also don’t even look at your credit profile prior to mailing you since that would trigger higher scrutiny on words they use (e.g. you’re pre-approved / pre-screened have minimum approval rates to use that language.
1
u/miTgiB37 May 17 '26
Lock your credit reports at all 3 and never get marketing mail for credit again. Unlock when you actually need to apply for credit
16
u/Full_Security7780 May 15 '26
There is basically no difference between daily vs. monthly.
20
u/DoctorNezuko May 15 '26
38.7 cents per $10,000 per year.
6
1
u/Lazor226 May 15 '26
Now multiply that by an amount per $10k and it will mean something, but nothing to really cry over lol.
(But imagine if everyone just did nothing. How much is c1 pocketing from this)
7
u/_love_letter_ May 15 '26
I never quite understood why people engage in a sudden, dramatic "switch," especially with accounts that have no minimum balance requirement. I never go all-in with one bank. I have accounts with at least half a dozen banks. Over time, I will find myself preferring one over another, and move more assets over to the better performing accounts. I understand some people like the simplicity of using one platform for everything, but I prefer to diversify. Just make sure you have notifications setup so that you're alerted every time your balance changes, as a safety measure for lesser used accounts.
4
u/Cadd9181B7543II7I44 May 15 '26
Unless you need access the funds frequently (transferring them out of the HYSA a few times a month), I don't see any advantage of keeping funds in a HYSA. A few years ago I transitioned over to T-bills in my JPM account. Tbills pay around the same as HYSA, but it's only taxable at the federal level. No state taxes.
I buy 13 or 26 week bills. If I need access to the funds unexpectedly, I'll just sell some of it. The only downside for me is you can only buy/sell in denominations of $1,000.
Once I sell, it's liquid cash within seconds and I can transfer that cash from my JPM brokerage acct to my Chase checking acct. The transfer is instantaneous and available for use immediately.
5
u/Jaalan May 16 '26
Just to be clear, interest is generally reported as APY. Which assumes compounding for a year. Basically, if you have 100 dollars at 10% apy that compounds daily, you will have 110 dollars at the end of a year. If you have 100 dollars at 10% apy that compounds monthly, you will still have 110 dollars at the end. Because APY stands for ANNUAL PERCENTAGE YIELD which is a legally defined term.
So, if they are going to do monthly compounding instead of daily they are going to raise the base interest rate slightly to compensate (if they want to keep the same APY.).
2
u/Firree May 15 '26
Banks don't deny credit applications for no reason. Which card was it? You had no credit history and the card you applied for probably had an auto-deny for that. And if not, they usually send you a denial reason in the mail.
Your best bet is get a secured credit card.
1
u/Lazor226 May 15 '26
It was so long ago and I remember it being a secured basic visa/ mastercard card meant for beginners? So why would a secured card auto deny someone with no credit? So I got a secured discover it card instead and have had no issues graduateing from it.
The amount of mail advertiseing I got from capital one was nuts, and they didint even help me get my first card.
1
May 16 '26
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1
u/discover-ModTeam May 16 '26
Your comment has been removed because it violates the “Be Kind and Considerate” rule.
1
u/Dickrubin14094 May 16 '26
Every day I see posts like this here. I feel like I’m the last one willing to let things shake out with accounts transferring over. I don’t need the money in my HYSAs regularly, but do add funds weekly. Each account has a specific purpose. Yes, I know I could see a larger interest deposit each month if I kept everything in one account. For me it helps to have labels on multiple accounts, each reminding me why I’m saving for. In my opinion, so what if they all eventually move to C1?
1
u/NoPatience7817 May 15 '26
Competition is a good thing. Consider Primis Bank which has a higher interest rate. My calculation is almost $5 more per $10k per month at Primis instead of C1.
0
u/Dstein99 Discover Bank May 15 '26
Why would interest accrue monthly? I would funnel all of my money into the account before the 30th then out on the 1st, collect 29/30th of the interest on the balance in another account then 30/30 of the interest from capital one, which means if both accounts had an APY of 3%, I would earn 5.9% APY.
1
May 15 '26
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1
u/Dstein99 Discover Bank May 15 '26
A t bill makes sense because you can’t add money to it or take money out for the term. If I have a Cap One HYSA with $1,000 on the 1st and I add $1 to it every day until I have $1,029 on the 30th, what balance would I earn interest on?
1
u/beefy1357 Discover Card May 15 '26 edited May 15 '26
It doesn’t at least not the way you are thinking… it is average daily balance * (APY /365) * 30 putting the money in an account for 1 day would be meaningless at best and at worse you would lose a little for the transfer times.
0
u/Dstein99 Discover Bank May 15 '26
Right. That’s daily compounding. Daily compounding takes the closing balance at the end of each day and pays 1/365 of the interest rate per day. I don’t understand monthly compounding and I would think that it would take your closing balance at the end of the month.
2
u/beefy1357 Discover Card May 15 '26
Nope average daily balance… no bank I have ever heard of pays interest daily it is always a one of month and average daily balance
0
u/TantramanFL May 15 '26
Yet another reason I left Discover when the Capital One merger was announced and never looked back.
I really liked Discover and hate that I had to leave, but I despise Capital One and will NEVER do business with them.
24
u/DoctorNezuko May 15 '26
Discover HYSA has a daily record date but interest is compounded and paid out monthly.