Question:
Our "Pricing Committee" decides on the APY that they want to offer on certain products, so when we plug in the APY on our system it provides us with the Interest Rate. Our internal system calculates the Interest Rate on the APY that was provided for example as .01489, then on our disclosures, we state that the Interest Rate is .01490 (we round it up).
Since this is technically an adverse action to our customers based on us disclosing an interest rate of 1.490 on our disclosures and our internal system is set at 1.489, which is off by .01% is this even an issue? I guess what I am wondering is since we allowed a "cushion" on the APY of .05%, are we allowed any type of “cushion” on the interest rate and by how much?
Answer: The interest rate is part of your legal contract with the depositor. You set it where you want, but once you agree to pay it--you better pay what you've agreed.
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