Let's just say that I invested 20,000 dollars in a CD at 5.18%. I made $87.99 for the first 31 days. This month I got a new statement in that said the second month I only made $85.52 for 30 days. Why did I lose? Figuring in that it should have been compounded? It's not adjustable rate!
2006-10-26 10:32:20 · 5 answers · asked by chefgrille 7 in Business & Finance ➔ Personal Finance
may be its accourding to the market condition
2006-10-26 10:38:06 · answer #1 · answered by micho 7 · 0⤊ 0⤋
I would imagine it has to do with the first being for 31 days and the second 30 days. The compounded $87.99 would not make that much difference, but one day less of interest would.
2006-10-26 17:41:07 · answer #2 · answered by Phoenix, Wise Guru 7 · 0⤊ 0⤋
It's most likely compounded daily. You got 31 days worth of interest in your first statement, but only 30 days in the next.
Your next month's interest will be 31 days (I assume) and will be larger.
2006-10-26 17:40:28 · answer #3 · answered by Rochester 4 · 0⤊ 0⤋
I am not a financial mind at all, but don't they calculate the interest paid by the actual number of days, just as when the month of February comes around, you'd earn much less.
2006-10-26 17:38:45 · answer #4 · answered by me_worry? 4 · 0⤊ 0⤋
1/31 of $87.99 = $2.84
$87.99 - $2.84 = $85.15 (one day less)
The compounding effect will be minuscule after one month.
.
2006-10-26 18:09:11 · answer #5 · answered by Zak 5 · 0⤊ 0⤋