How do I figure out interest myself on my savings account?

Question

I want to know how interest is calculated, i knew it but i forgot!!

Answer 1

the amount multiplied by the rate multiplied by the time (banks use 360) so monthly would be either 30 or 31/360.

Answer 2

Although your account is only credited monthly, the interest on savings accounts is compounded daily (which means you earn interest today on the interest you earned yesterday). So, to calculate the interest, you need to convert the stated interest rate (nominal, not APY) into a daily rate (i.e. 5% / 365 = .0137% daily).

I personally think it is best to calculate the interest using a spreadsheet because it is easier to conceptualize and reflect account transactions, but there is also a formula for interest:

i = (B*(1+r)^n) - B

where:
B = Balance
r = daily rate
n = # of days
i = interest

Here is a simple example for the spreadsheet method. All you need to do is multiply the Begin Bal by the daily rate, then add the interest to the balance. The next day starts with the End Bal. Total the Interest column for the month and it should match your bank statement (assuming no transactions and no changes to the interest rate during the month)

Day | Begin Bal | Interest | End Bal
1 | $1,000.00 | $0.1370 | $1,000.14
2 | $1,000.14 | $0.1370 | $1,000.27
3 | $1,000.27 | $0.1370 | $1,000.41
4 | $1,000.41 | $0.1370 | $1,000.55
5 | $1,000.55 | $0.1371 | $1,000.69

You can also add a column to adjust for deposits/withdrawls.

I wish the formatting was better :-)
Hope this helps

Answer 3

How To Work Out Interest On Savings

Answer 4

Take the total amount of your savings account and multiply it by the interest that it is yielding you. You can divide it by 12 if you want to figure the monthly yield. For example $1000 savings acct. balance multiplied by your interest rate of 5% would yield you $50 per year or $4.167 per month ($50 divided by 12).

Answer 5

Hope this helps!