savings calculations

blinko

savings calculations
hi im thinking about going for the Brad and bing online saver thingy even though they have reduced there rates

they currently do
annual 5.25
montly 5.13

now according to my calulations
annually on 1000 i would have 1052,5
monthy on 1000 i would have 1052.523545941067588211730315125
1052.52

this is gained by divinding 5.13 by 12 then
1000 x (1.004275)*12

can anyone confirm these calculations are correct as i hate working out montly compound interest the pen and paper way.

Robert_Sterling_3

savings calculations
Hi i'm thinking about going for the Bradford and Bingley online saver account even though they have reduced their rates:

They currently pay
annual 5.25%?
montly 5.13 %?  surely not monthly
now according to my calculations
annually on 1000 I would have £1052.50
monthy on 1000 I would have £1052.523545941067588211730315125


Just off the top of my head and using mental arithmetic I would say you have done quite well but your accuracy has been limited by your use of a calculator or computer that was not sufficiently accurate.
Using my Texas Instruments TI-35X { Available from all good museums} I make the answer, using your excellent method, £1052.523546 or £10.52
You also end up with £1052.52


this is gained by divinding 5.13 by 12 then
1000 x (1.004275)*12

can anyone confirm these calculations are correct as i hate working out montly compound interest the pen and paper way.

Unfortunately I cannot confirm that your calculation are correct.  I can however confirm that they are not correct.  Clearly you have gained 2p from somewhere and of course MSE members would applaud that.

You method is 100% spot on.

Where it all goes pear shaped is that 5.25% per annum equates to a monthly rate of 0.4273128% approx
This in turn gives a gross interest rate of  5.1277533%
The consumer Credit Act 1975 allows lenders to round their figures in advertisements
So although the bank pays gross interest of 5.1277533% it tells you it pays 5.13% gross per annum.
That is where the chiz comes in.

Just a little tip here.
If it tells you the annual rate is 5.25% then finding the monthly rate and then using the monthly rate to calculate the yearly rate is a bit of a waste of time.

blinko

Premium interest rate
Annual or monthly interest options
Annual interest: 5.25% gross p.a., 4.20% net p.a., 5.25% AER
Monthly interest: 5.13% gross p.a., 4.10% net p.a., 5.25% AER
Annual interest rate guaranteed to at least match the Bank Base rate until 31st December 2005
Minimum opening balance of £1,000 with a maximum of £2m
View and make transactions online 24 hours a day
Pay money in via direct debit
Withdrawals any time via BACS to a nominated account without penalty
Account can only be operated via the Internet and third party withdrawals are not permitted

yup thats what im getting fom the http://www.bradfordandbingley.co.uk/savingsandinvestments/esavings.asp link
thanks i figured the calculations somehwere weret quite right i ws wondering where the 2p came from , its just i particularly like monthly interest as you can actually see the interest coming in