The yield on bank deposits directly depends on the annual rate set by the agreement. However, there are several conditions that can increase your profit to the maximum or reduce it to almost zero. Let's talk about how to calculate the interest on a deposit, what happens during capitalization and how to increase the yield to the maximum value.
Simple interest
They represent a reward expressed as a percentage of the deposit amount and accrued by the bank for a certain period - a day, month, year or another period depending on the terms of the agreement.
Simple interest is not added to the deposit "body" and does not spain mobile database generate income in the future. However, it can remain on the deposit balance or be paid to another client account - depending on the terms of a specific banking product.
Typically, such a system is provided for deposits that allow partial replenishment or withdrawal of funds. Do not forget about how all banks use clients' money: deposits are the main investment tool.
Therefore, the more stable opportunities for managing funds a credit institution has, the higher the percentage it can give to the client as a reward. And vice versa, if the depositor can withdraw money or change the deposit amount at any time, the bank will assign a lower percentage.
Compound interest or capitalization
In essence, this is "interest on interest": the yield on the deposit is added to its "body" at certain intervals, which increases the overall profit. The deposit amount gradually grows. Accordingly, more interest is accrued on it.