I Don't Understand How The Amount Of Interest Is Calculated When One Searches Deposit Rates On This Website

HollyHolly | Mar 7, 2019 | 89 posts since 2015

When one searches for deposit rates on this website, opposite the name of the bank or credit union in the list

is the amount that would be earned for a deposit. I don't understand how that amount is calculated. For example, my amount is listed in the box at the left above the search results as $25,000, but the amount on the right never equals my calculations for that amount of principal times that amount of interest for a given period. How is that amount arrived at?

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Answers

SMT1 | Mar 8, 2019 | 38 posts since 2018

I would suspect you are not calculating for yearly compounding on CD's greater than one year and therefore underestimating how much interest is earned.
i.e. for a 5year $100,000 CD with an APY of 4%: 100,000 x .04 = $4,000 would be earned in the first year. You WOULD NOT then multiply by 5 years to figure out the total earned in 5 years which would be $20,000. The second year you are earning 5% on 104,000 and so forth thru 5 years. If you want to do manually on your calculator 100,000 x 1.04 =104,000 x 1.04 =... The result will be $121,655 with $21,655 interest earned not $20,000 which did not account for the yearly compounding.

Easier to just use an APY calculator. https://www.depositaccounts.com/tools/compound-interest-calculator.aspx

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