MHB Calculate Interest on Account: 2.1% per Annum

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To calculate interest on an account with a 2.1% annual rate, the most accurate method is to compute daily interest based on the account balance for each day, which is approximately 0.00575% per day. Alternatively, one can calculate the average balance over the year and multiply it by 0.021 to find the total interest. For example, if the average balance is $1,200, the interest earned would be $25.20. The specific calculation method may depend on the bank's policy regarding interest accrual. Understanding these methods can help in accurately determining the interest due.
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I have an account that pays 2.1% per annum. The amount in the account has varied over the year due to withdrawals. My question is what is the formula for working out the interest due to me over the year? Many thanks in advance Lave48
 
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Precisely what happens depends upon the policy of the bank. Most likely, and certainly the most exact, would be to deal with individual days. An interest rate of 2.1% per year is 2.1/365= 0.00575% per day. Calculate the interest for each day with the amount of money that day.
 
lave48 said:
I have an account that pays 2.1% per annum. The amount in the account has varied over the year due to withdrawals. My question is what is the formula for working out the interest due to me over the year? Many thanks in advance Lave48
...or calculate the average balance for the year;
multiply result by .021

Example: if av.bal. = 1200, then 1200*.021 = 25.20
Enough for a 12pack of beer!
 
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