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M M M
Lv 7
M M M asked in Business & FinancePersonal Finance · 10 years ago

how do you work out the interest on savings?

if the interest rate is 2.75% a e r paid monthly

Update:

Thanks elaine, Top Answer.

2 Answers

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  • ?
    Lv 6
    10 years ago
    Favorite Answer

    AER = Annual Equivalent Rate so multiply your balance by 0.0275 and divide that result by twelve to get the monthly interest.

  • E
    10 years ago

    take the dollar amount. (I'll use $1000 as an example)

    divide 2.75% by 365. which equals 0.0000753425% daily.

    take the number of days and multiply that by the daily number. June has 30 days for example. = 0.002260275

    then multiply that number by the the dollar amount. = 2.260275

    That's the amount of money you earned for the month. new balance = 1002.26

    Assuming it's compounded monthly then you would repeat the same process except your new balance would be the $1002.26 instead of $1000.

    Also take note the interest rate is different than the APY or AER - this is just how they figure out the math behind it

    Source(s): I'm a bank manager
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