We want to advertise a special CD rate with a minimum balance of $2,500. But in order to get the special rate, we are also requiring the customer to have any checking or savings account with us with an aggregate balance of $500 or more. To calculate the APY for this advertisement do we use $2,500 for the principal or do we have to add in the $500 too?

If I understand your question correctly, you will not be paying interest on the $500 so your can not calculate the APY to include it.

The $500 isn't in the account on which you want to calculate the APY. So you don't include it. Actually, if you use any amount of $1000 or more (to eliminate problems with rounding), you should come up with the same APY.

Thank you both.