How can a bank make money if they pay .50% intrest daliy is the intrest compounded ie. I place $1000 x .50% x 30 = $1150, so next month do I gain intrest on the $150 or is it like a CD?
Also are there any more fees than the 10$ monthly service fees if my balance drops below $3,500?
2007-09-09 17:12:20 · 4 answers · asked by Dogman 1 in Business & Finance ➔ Personal Finance
How can a bank make money if they pay .50% intrest daliy is the intrest compounded ie. I place $1000 x .50% x 30 = $1150, so next month do I gain intrest on the $150 or is it like a CD?
Also are there any more fees than the 10$ monthly service fees if my balance drops below $3,500?
This is were I get my .50% from http://www.bankrate.com/brm/rate/mmmf_mmaratehome99.asp?params=CA,283&product=33
2007-09-09 17:57:25 · update #1
I seriously doubt it's .5% daily. That would be an annual interest rate of 183%. No one pays that much and there is never a guarantee on how much money you make in a money market account. Most likely, it is .05% which would be 18.3% annually netting you $183 by the end of the year. This would be an incredibly risky investment and could lose you as much as it makes for you. Now I'm guessing that if you're looking at Wells Fargo for investing, they will not put you in anything more than 10-13% annually. This would be considered a high risk money market account even at 10%, but would be more likely when it comes to netting money. If you are looking for something more risky then that, you will have a hard time finding it in a money market account. Growth like that usually only happens when you purchase one stock at a time. Money markets buy many stocks, as many as 50 at a time.
Hope this helps.
2007-09-09 17:26:50 · answer #1 · answered by E.T. Barton 5 · 0⤊ 2⤋
.50% is one half of 1 percent, which would give you a little over $10 a year.
To answer your question, a bank can always make money because they charge more interest to make loans than they give out in interest on their accounts and cds.
2007-09-09 18:13:31 · answer #2 · answered by mslider2 6 · 2⤊ 0⤋
It states APY...that is an ANNUAL rate. About $5 / $1000 on deposit
2015-03-11 08:58:04 · answer #3 · answered by William 1 · 0⤊ 0⤋
I don't think its .50% daily. I think its about 4 percent annually.
2007-09-09 17:16:38 · answer #4 · answered by hottotrot1_usa 7 · 1⤊ 1⤋