How do I calculate daily interest rates on savings?

daisythecat_2

Hi
Can anyones tell me how to calculate the following ;
I have 275,000.00 in a 6 month fixed rate savings account the net interest rate is 5.19%, how do I calculate what I am earning per day, using a calculator, please help I'm not very good at maths!!!!

derrick

daisythecat wrote: »

Hi
Can anyones tell me how to calculate the following ;
I have 275,000.00 in a 6 month fixed rate savings account the net interest rate is 5.19%, how do I calculate what I am earning per day, using a calculator, please help I'm not very good at maths!!!!

Try posting on the Savings and Investings board, you will get a better response, this is Sitefeed Back thread.

Lokolo

£275,000

5.19%

So £275,000 / 100 gives you 1%

* 5.19 gives you 5.19%, thats over the year

Now / 365 to give you each day. £39.10 a day.

freddysmith

To give the same answer above I always work daily rates out like this

(275000*0.0519)/365 = 39.10

Lokolo

So do I but I thought I would try and make it more simple for the OP ;)

freddysmith

Lokolo wrote: »

So do I but I thought I would try and make it more simple for the OP ;)

I blame it on Excel

Oblivion

2008 is a leap year, so some financial institutions will be using 366 days as the base and counting the 29th February as an interest earning day. Others may stick to a base of 365 and treat the 29th February as a non-interest earning day. Just thought I'd add to the confusion :rotfl:

Dave.

esbo

Actually this might not be of much good to you if you are not very good at maths, but I got carried away as I was top of my class :rolleyes: If only those credit crunch bankers were as good at maths as me! :rotfl::rotfl::rotfl:

However I did notice your net rate is the same as the HSBC gross rate for its bonus saver account so either you don't pay tax or you are getting a better gross rate, which you should be as the HSBC one is instant access (internet account)

Hmmm I think it depends what the interest rate means there are usually two figures
such as 5.25% AER (5.19% gross), so you really need to know which of the two it is however they are usually very similar.
In the above example I think the 5.19% is what you earn every month (or whatever period you get interest paid). Because the interest is paid monthly you get interest on interest so over a year your money will have grown by moe than 5.19%, it will have grown by 5.25%, which is the annual equivilant of 5.19 monthly. (You only get a 1/12 of that figure each month) but when they are all added up it is the same as
5.25% of the initial sum.
AER=Annual Equivilant rate. So you need to know which figure is being used to be accurate, and how often it is paid.


I am rambling a bit here is wikipedia explaination of how to convert between the two, pretty complicated eh? That's why they quote two figures. So you should not be using the one with AER after it for the monthly rate.
The ammount of interest you recieve should increase each month as it is compounded.
.
http://en.wikipedia.org/wiki/Compound_interest

Translating different compounding periods

Each time unpaid interest is compounded and added to the principal, the resulting principal is grossed up to equal P(1+i%).
A) You are told the interest rate is 8% per year, compounded quarterly. What is the equivalent effective annual rate?
The 8% is a nominal rate. It implies an effective quarterly interest rate of 8%/4 = 2%. Start with $100. At the end of one year it will have accumulated to:
$100 (1+ .02) (1+ .02) (1+ .02) (1+ .02) = $108.24
We know that $100 invested at 8.24% will give you $108.24 at year end. So the equivalent rate is 8.24%. Using a financial calculator or a tableis simpler still. Using the Future Value of a currency function, input

• PV = 100
• n = 4
• i = .02
• solve for FV = 108.24

You know the equivalent annual interest rate is 4%, but it will be compounded quarterly. You need to find the interest rate that will be applied each quarter.

$100 (1+ .009853) (1+ .009853) (1+ .009853) (1+ .009853) = $104
The mathematics to find the 0.9853% is discussed at Time value of money, but using a financial calculator or table is easier. Input

• PV = 100
• n = 4
• FV = 104
• solve for interest = 0.9853%

daisythecat_2

Thanks everyone
See if you can help me with this!!
I'm having problems with the Halifax at the moment over the interest that they paid me when i closed the account, I think they have short changed me.
I opened a 6 month fixed rate account that paid 5.19% net interest and invested 275,000.00 pounds. I opened it on 22/4/08 to mature 22/10/08 which works out 184 days, but I closed it early on 16/9/08, so I only had it opened for 148 days. Because i closed it early i lost 30 days interest on my money, which is fair enough that is the penelty for closing the account early, so i work it out that i should get 118 days interest. What they actually paid me was 3,369.56p, am i right in thinking that this is wrong, or maybe someone could explain to me how thay have worked this interest out, because for the life of me i can't work it out!!
I have read all the small print on the terms and conditions for this account but could only see the part about losing 30 days interest.

This is driving me nuts, someone help me please!!!!

Lokolo

Oblivion wrote: »

2008 is a leap year, so some financial institutions will be using 366 days as the base and counting the 29th February as an interest earning day. Others may stick to a base of 365 and treat the 29th February as a non-interest earning day. Just thought I'd add to the confusion :rotfl:

Dave.

To be quite honest I thought they would always use 365, but use the 29th as just an extra day.

Who knows, who knows...

YorkshireBoy

What were the fixed rate details for:

AER
gross p.a.
net