How do you calculate interest rates?

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Kroze

Kroze

Diamond Member
Apr 9, 2001
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I'm thinking of putting my money into short-term savings account. I just don't know how to calculate interest rates.

like, i want to put $1000 into a cd account for a 180days year term with 2.84% interest rate. how much will i get at the end of the term?
 
Kroze

Kroze

Diamond Member
Apr 9, 2001
4,052
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well? anyone?



I made a mistake of opening a CD account last year with a 5 years term @ 4.24% interest rate...that thing is growing slowly. I just hate having my money not liquidable.


So now i still have a couple of grand to invest in a few short term savings. I'm thinking of opening several short term CDs. Each one will be open with $1k in various length 180days, 6 months, 9 months, 1year. etc...
 
Kroze

Kroze

Diamond Member
Apr 9, 2001
4,052
1
0
Originally posted by: AgentZap
Is it compounded continuously, monthly, or quarterly?
Click to expand...


$1k compounded interest @ 2.86% for 182 days,


well i just rather you teach me how to do the rates :) i don't want you to do it for me.


is it $1k x .0286 x 182days? =
 
A

AgentZap

Senior member
Sep 1, 2001
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I just took a finance class a couple semesters ago. It should be $1028.74 if I remember anything from the course if the compounding is done monthly.

INGdirect is paying 3.45% for 1 year CD's and their savings account is paying 3% and you aren't locked in so in my opinion a CD paying 2.86 is garbage
 
Kroze

Kroze

Diamond Member
Apr 9, 2001
4,052
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0
I really like my bank (USAA.com) and and i would like to keep everything in 1 place (checking,savings, CDs, insurance, etc)

USAA has got to be the best bank i've ever known. Customer service is just awesome.
 
Kroze

Kroze

Diamond Member
Apr 9, 2001
4,052
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Here's my current interest rate.

Variable 182 Days 2.43 2.46 Min Dep $1,000


Variable 12 Months 2.57 2.60 Min Dep $1,000


Fixed 91 Days 2.33 2.36 Min Dep $1,000


Fixed 182 Days 2.86 2.90 Min Dep $1,000


Fixed 7 Months 2.96 3.00 Min Dep $1,000


Fixed 9 Months 3.15 3.20 Min Dep $1,000


Fixed 12 Months 3.54 3.60 Min Dep $1,000


Fixed 15 Months 3.64 3.70 Min Dep $1,000


Fixed 18 Months 3.78 3.85 Min Dep $1,000


Fixed 24 Months 4.03 4.11 Min Dep $1,000


Fixed 30 Months 4.12 4.20 Min Dep $1,000


Fixed 36 Months 4.65 4.75 Min Dep $1,000


Fixed 48 Months 4.31 4.40 Min Dep $1,000


Fixed 60 Months 4.98 5.10 Min Dep $1,000

it's very competative, i think it even beat INGdirect on some.
 
A

AgentZap

Senior member
Sep 1, 2001
730
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Originally posted by: Kroze
Originally posted by: AgentZap
Is it compounded continuously, monthly, or quarterly?
Click to expand...


$1k compounded interest @ 2.86% for 182 days,


well i just rather you teach me how to do the rates :) i don't want you to do it for me.


is it $1k x .0286 x 182days? =
Click to expand...

Well for simple interest its (Principle)(1 + IR)^n where N is the number of years.

If it is compounding multiple times per year its

(Principle)(1 + IR/n)^Yn where Y is the number of years and N is the number of times it is compounded in a year
 
Jadow

Jadow

Diamond Member
Feb 12, 2003
5,962
2
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you can get a savings accoung from ING Direct, Capital One, or emigrant Direct that pays over 3% and doesn't have any of the restrictions or penalties that cds have
 
W

Wild1

Member
Feb 22, 2005
131
0
0
Originally posted by: AgentZap
I just took a finance class a couple semesters ago. It should be $1028.74 if I remember anything from the course if the compounding is done monthly.

INGdirect is paying 3.45% for 1 year CD's and their savings account is paying 3% and you aren't locked in so in my opinion a CD paying 2.86 is garbage
Click to expand...

I think the bank is quoting an annual interest rate. He is looking for the amount after a 180 day term. For half a year, if the Annual rate of return is 2.84% the amt after a half year is $1014.20

One way for you to calculate this type of info is to use the calculators built into Excel. On the insert menu: select Function/choose Financial Values, select FV (for future value) then Enter. Now in the boxes for formula variables...your Rate is .0284 per YEAR. or 0.0284/2 =0.0142 for half a year. For NPer (number of periods), you are just putting one lump sum in so enter 1 (1 period of 180 days - the interest rate needs to be matched with the period). For Pmt, put in 1000. For PV, leave blank. For Type, enter 1 cause you are putting the 1K in at the beginning of the period.

With a little expermenting you will be able to use this to calculated more complex returns such as annuities where you are depositing a periodic amount.

PS, the longer the term, the more time risk associated with the loan, the greater the interest rate. So pick the term you want to have your $ tied up first, then look for the best rate with that term.

Originally posted by: Kroze
Originally posted by: AgentZap
Is it compounded continuously, monthly, or quarterly?
Click to expand...


$1k compounded interest @ 2.86% for 182 days,


well i just rather you teach me how to do the rates :) i don't want you to do it for me.


is it $1k x .0286 x 182days? =
Click to expand...

No for quick calculation: $1k x .0286 / 365 x 182days
(is the rate 2.86 or 2.84%??)


Now, back to hot deals
 
M

Macro2

Diamond Member
May 20, 2000
4,874
0
0
RE:"I'm not sure what inflation is, but my guess is you won't make squat. Savings accounts and CD's are a joke"

What's the alternative?

1. Stocks in an inflatioanry environment? Maybe you lose 10-20%

2. Real Estate...great a few years ago now you risk getting in at te top of a bubble and losing all your equity.

3. Bonds in an interest rate rising environment? You lose principal.

Suddenly the FDIC insured 3.25% doesn't look to bad.
 
I

imported_motodude

Senior member
Aug 3, 2004
344
0
76
Originally posted by: Macro2
RE:"I'm not sure what inflation is, but my guess is you won't make squat. Savings accounts and CD's are a joke"

What's the alternative?

1. Stocks in an inflatioanry environment? Maybe you lose 10-20%

2. Real Estate...great a few years ago now you risk getting in at te top of a bubble and losing all your equity.

3. Bonds in an interest rate rising environment? You lose principal.

Suddenly the FDIC insured 3.25% doesn't look to bad.
Click to expand...


True, of course there is always Vegas!:beer:

 
N

Noirish

Diamond Member
May 2, 2000
3,959
0
0
Originally posted by: Kroze
I'm thinking of putting my money into short-term savings account. I just don't know how to calculate interest rates.

like, i want to put $1000 into a cd account for a 180days year term with 2.84% interest rate. how much will i get at the end of the term?
Click to expand...

you'll have $1015 more or less at the end of 6 month.
 
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