| Question abount my bank account |
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MannyS
Contributing Member
Cash: $ 7.30
Posts: 34
Joined: 23 Jan 2006
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| Question abount my bank account |
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I have a question regarding my new bank. As of recently I had a new account opened with Allstate bank. They offered me 3% APY which was daily compounded. Can someone explain to me how this is going to be compounded daily? I gave them $100 up front to open the bank account. I looked at my statement and it said $100.03! Is that right? So it wouldn't be three dollars added daily, but three dollars within a year, correct?
I am confused like no other. All those books I've bought really don't give you as much information as you truely need. Sometimes a small little bar graph doesn't do too well either. *sigh*
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Mon Jan 23, 2006 4:09 am |
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Rolo
Yo' Daddy
Cash: $ 309.70
Posts: 1551
Joined: 13 Mar 2005
Location: Colorado/Florida
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I have no freakin' idea what he just said because ebonics takes too much effort to read.
3% annually, compounded daily: divide 3% by 365 days to get
0.000082191780821917808219178082191781 daily.
Multiply your account balance by that figure every day.
"Expect me when you see me."
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Mon Jan 23, 2006 1:22 pm |
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zZigzZag
Member
Cash: $ 3.65
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Joined: 17 Jul 2005
Location: Colorado
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| use your spreadsheet program |
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If you have a spreadsheet program such as Excel you can use the built-in FV (future value) function to compute your interest earnings. The formula is =FV(rate,nper,pmt,pv,type) where rate is the percentage rate per period, nper is the number of periods, pmt is the amount invested each period, pv is the beginning (present) value and type refers to whether interest is paid at the beginning or end of the period.
So, assuming you deposit $100 for one year at 3% compounded daily the formula would be: =FV(.03/365,365,,100). Rate=.03 divided by the number of days, Number of Periods=365, Periodic Payment=0 so just omit that parameter, Present Value=100, Type is end-of-period by default so just omit. If your bank compounded monthly the formula would be: =FV(.03/12,12,,100)
If you wanted to add $50 per month to your initial deposit you would use =FV(.03/12,12,50,100). Note that if you used the daily formula above the periodic payment would have to be per day. With an amount as small as $100 the difference between daily and monthly compounding would only be about $0.01 per year, so it really isn't worth worrying about.
Hope that's helpful. It would be well worth your time to experiment with the coumpound interest formulae in Excel and learn to use them.
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Wed Jan 25, 2006 5:06 pm |
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Kiaser
Senior Member
Cash: $ 43.05
Posts: 209
Joined: 12 Apr 2006
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| Re: Question abount my bank account |
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quote:
Originally posted by MannyS
I have a question regarding my new bank. As of recently I had a new account opened with Allstate bank. They offered me 3% APY which was daily compounded. Can someone explain to me how this is going to be compounded daily? I gave them $100 up front to open the bank account. I looked at my statement and it said $100.03! Is that right? So it wouldn't be three dollars added daily, but three dollars within a year, correct?
I am confused like no other. All those books I've bought really don't give you as much information as you truely need. Sometimes a small little bar graph doesn't do too well either. *sigh*
Yes, $3 by the end of the year... If you find a bank that gives 3% daily returns then let me know immediately!
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Wed Apr 12, 2006 9:05 pm |
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