Bank interest refers to the remuneration received by banks for providing financial services to clients and is an important component of the national economy. There are many types of banking and different methods of calculating interest. In general, the bank interest algorithm is mainly concerned with two aspects: the calculation of interest rates and the timing of the calculation. The algorithm for bank interest is analysed from different angles。

What about bank interest

I. Calculation of interest rates

1. RATE OF INTEREST ON ONE-YEAR TERM DEPOSITS: THE INTEREST RATE CALCULATED ON A YEAR-BY-YEAR BASIS IS ALSO A MORE COMMON METHOD OF CALCULATION IN BANKING OPERATIONS. IN THE CASE OF A BANK WITH A ONE-YEAR TERM DEPOSIT RATE OF 3%, IF YOU SAVE $10,000, YOU CAN GET $10,000 *3% = $300 AFTER A YEAR, AND $10,000 + $300 = $10,000 300 AT THE END OF THE YEAR。

2. CURRENT DEPOSIT RATE: THE INTEREST RATE IS THE DAILY RATE AND IS CURRENTLY THE MORE COMMON RATE ALGORITHM. IN THE CASE OF A BANK WITH A CURRENT DEPOSIT RATE OF 0.35%, IF YOU HAVE OPENED A DEMAND DEPOSIT ACCOUNT AT THE BANK WITH A BALANCE OF $10,000 FOR ANY ONE DAY OF THE YEAR, THE INTEREST RECEIVED PER DAY IS $10,000* 0.35%/3665 = $0.0963, OR $10,000 +36 = $10,000 AT THE END OF THE YEAR IF THERE IS NO WITHDRAWAL OR DEPOSIT。

3. Base rate: The interest rate set by the Central Bank is the basic reference for the interest rates on loans and deposits. The adjustment of the Central Bank ' s benchmark interest rate will have an impact on the interest rates of bank loans and deposits. In the actual business, the bank's interest rate on loans and deposits is generally derived by adding a certain floating rate to the base rate。

Time for calculation

Interest-bearing days: refers to the time at which the deposit funds can generate interest and is a very important concept in the calculation of interest. Specific methods of calculation, for example, one-year term deposits: If the deposit is deposited from 1 January to 31 March, the time to calculate interest is 90 days; if the deposit is deposited from 1 April to 31 December, the time to calculate interest is 271 days. Different deposit times affect the amount of interest calculated。

2. COMPUTATION OF COMPOUND INTEREST: THE COMPOUND INTEREST CALCULATION IS A METHOD OF CALCULATING ROLLING INTEREST, AS IN THE CASE OF FIVE-YEAR TERM DEPOSITS AT A BANK: IF THE AMOUNT OF THE DEPOSIT IS $10,000 AND THE ANNUAL INTEREST RATE IS 3%, THEN INTEREST EARNED AFTER FIVE YEARS IS $10,000* (1+3%) ^5-1 = $1592.73, REGARDLESS OF EARLY WITHDRAWAL AND EARLY TRANSFER. THUS, COMPOUND INTEREST REPRESENTS A DOUBLE INCREASE IN INTEREST GAINS ON DEPOSITORS AND IS CALCULATED IN A MORE COMPLEX MANNER. IN PRACTICE, BANKS ALSO PROVIDE CLIENTS WITH MORE DETAILED METHODS FOR CALCULATING COMPOUND INTEREST。