Answer:
You are permitted by 230.7 to use a daily interest factor equal to the interest rate divided by any number equal to or less than 365 (366 in a leap year). But you must apply that factor every day of the year on which you hold the deposit. So if you use a "360 method" you will actually pay more interest (because the factor will be greater than it would if you used 365).
The APY should be greater if you use 360-based factor in interest calculation.
First published on BankersOnline.com 07/18/05