This might not be a big deal but it is always good to know how the system works.
Have you ever wonder why although you put in an exact amount of money into a fixed deposit (FD) account, but you receive not exactly the same interest every month?
This is simply because most of the FDs calculate interest payment based on number of days the money is in the account, not number of months.
For example, say you have a FD of RM 10,000 put on 1st Jan 2017 with 3% annual rate and monthly maturity time. By 1st Feb 2017, you will receive RM 10,000 × 3% × 31 days ÷ 365 days = RM 25.48 interest.
Say if you continue to maintain the amount of RM 10,000 in that account. By 1st Mar 2017, you will then receive RM 10,000 × 3% × 28 days ÷ 365 days = RM 23.01 interest. This is the reason why every month the bank will give out interest of different amount.
Take note that if it is the leap year (ie year 2020), then the denominator shall be 366 days instead of 365 days.
Just sharing, or just to show you that the banks do not cheat you with the rates declared, haha. :)
No comments:
Post a Comment