How do I calculate monthly interest on a regular savings account?

How do you calculate the interest you will earn in a savings account?

• Answer:

  The financial institution (bank or credit union) will publish their interest *rates*, and you can look for these rates in the branch, online, or if you giv call theiir customer service line. Really the question should be refined, because if you are talking about how much interest you are going to earn in a specific savings account given a fixed amount initial deposit, with interest compounding over time, then it depends on initial amount. There's a formula printed somewhere, I'm sure, but say you deposit $1000 and leave it, earn 1% interest. At the end of 1mo. you'd have $1010. Then at the end of the second month, you'd now earn 1% interest not on $1000, but on $1010, so your balance should then become something around $1020 by month 2. Interest rates being paid to savings accounts are incredibly low right now (in fact, aside from a few specialty banks, you'll be lucky to get 1%), but in years past, 5-6 or even 10% wasn't uncommon (though you'd have to go a while back for that!). But in general, that's how interest/compounded interest works. You'll probably want to rephrase your question because noone knows for sure what you mean, so we're making educated guesses, but that's pretty much it--it boils down to either 'ask the bank' or make the calculations when you know how much you have in the bank, whether you'll be using the cash or how much you can keep at the bare minimum in the acct each month, etc. If we wanted to put you on blast, we coulda said 'you ain't earnin' no interest cause you gotta leave some funds up in that savings account before they pay you any interest, instead of taking it out to buy (TVs, new cars, crack, other consumer items) and overdrawing yr account so you wind up paying *them* interest!