Is it permissible for banks to highlight interest rates more than APY in advertising?

The correct answer reflects that the Annual Percentage Yield (APY) must be more prominently displayed in advertisements for interest-bearing accounts. This requirement is rooted in the Truth in Savings Act, which aims to ensure transparency and comparability of financial products for consumers. The APY is crucial because it provides a standardized way for consumers to understand the actual return on their savings, taking into account the effects of compounding interest.

Highlighting the APY more prominently than other rates helps consumers make informed decisions by focusing on the actual yield they can expect over time, rather than just the nominal interest rate, which may not fully represent the earnings potential. This practice aids in reducing confusion and enables customers to compare offers effectively.

In summary, the emphasis on the APY in advertising aligns with the objectives of the Truth in Savings Act, promoting clear and upfront disclosures to consumers about their savings options.