Interest on the deposit means the remuneration that is paid by the bank to the depositor for placing his funds with them. Despite the fact that the Central Bank of Russia requires credit institutions to accrue interest on the deposit every day, in fact, they are paid only after the expiration of the term of the deposit in accordance with the terms of the agreement. Sometimes the day of payments falls on a weekend, in this case, you can receive your income only on the next working day.
Instructions
Step 1
To calculate interest on deposits, credit institutions use two methods: complex and simple. The first is used for deposits with interest capitalization, and the second - without capitalization.
Step 2
The simple method does not imply adding interest to the body of deposits, since they are automatically transferred to another client account. In this case, income from a deposit can be received every month, quarter, every 6 months, a year, or at the very end of the term of the deposit account. In this case, it is not difficult to calculate the interest, they are always calculated only from the originally contributed amount.
Step 3
In case of a capitalized deposit, the accrued interest is added to the principal amount. The timing of their accrual is prescribed in the contract. Most often this happens monthly or quarterly. Due to interest, the body of the deposit increases, therefore, the total profitability of the deposit increases. This suggests that, at the same rate, an investment with capitalization can bring a large profit.
Step 4
If interest is accrued once at the end of the term, then they are calculated using the formula of simple interest, for a deposit with capitalization - according to the formula of complex operations.
Step 5
To compare the profitability of deposits with different interest rates and different terms, when calculating the compound interest, the effective rate is calculated on an annualized basis. This will determine the number of interest to the initial deposit that can be received in a year.
Step 6
You also need to pay attention to the fact that interest on the amount of replenishment is often charged only from the next month. If a certain amount is partially withdrawn from the deposit, interest may not be charged, and in case of early termination of the deposit, they are recalculated for the entire period.
