Financial Information
Can someone clarify what interest rates do for the money in my savings account?
I’ve asked this question before but I was not clear enough. I have a 4. 89% interest rate for my savings account and 5% apy. If I have for example $3,000. 00 in my savings account now, does the 4. 89% add to that money I have? I thought that if it did work like that I would get a large amount of interest back each month. Could someone please help me! I would very much appreciate it.
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about 1 month ago
The 4.89% interest rate compounds monthly to yield the 5.0% APY. If you have $3000 in your savings account after 1 month you would have earned (1/12)x4.89% interest which on $3000.00 is $12.23. Is that the large amount of interest you expected?
Interest rate versus APY: 4.89% rate equates to a 0.4075% rate per month. In 12 months the compounded yield (APY) would be (1.004075)^12-1 = 5.00%
about 1 month ago
You will not make much on that. Only about $150 a year.
about 1 month ago
The 4.89% sounds like the APR and the 5.00% sounds like the APY. Don’t have time to get into the difference between the 2 but APR is easier to use for calculations so lets use that.
The APR is for the entire year, not for each month … so you wouldn’t get 4.89% interest every month, you’d get 4.89% divided by 12.
The formula to calculate your monthly interest is BALANCE x APR / 12. In your case, 3000 x 0.00489 / 12 = 12.225
The bank should round that up to $12.23
Hope that helps. If you want to know the diff between APR and APY, check out the below link …
about 1 month ago
The 4.89% is an annual rate, but money is posted to your account typically on a monthly basis. Take .0489 and divide it by 12 and multiply it by 3,000. This yields you $12.23 in interest for your first month. In the second month, you’ll have $3,012.23 in the bank, so your interest earned will be slightly higher. After 10 years, you’ll have about $4887.20 if interest rates remain constant. Not a lot of money but growing.
Good luck.
about 1 month ago
For each $1.00 in your account, you will earn 5 cents in interest each year. The earned interest will be added to the principal amount you have in the account. If you take money out of the account before the date of interest accrual, you will not receive anything for the amount you withdraw.