Confused about apr rates

C

Coll

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Hi All you may just laugh when you read this one or just say Iam thick? but

I am confused I am looking at the best buy section and thinking about a lump sum deposit. this is were I am confused. If i put my money in for 3 months they will give my 3.55%. or they will give me 3.02% for 6 months. So this is were I confused if I put it in for two lots of 3 mounts that means I get 7.10%?
 
Sorry to disapoint you but you wont be geting 7.10% for 6 months, that would be 14.20% for 12 months!!!! (I wish) APR stands for annual percentage rate so it means if it was invested for 12 months (annual) thats the interest you would recieve. If you want to work out your interest for the 3 months divide 3.55% by 365 days (annual) & them multipy that by the number of days it would be invested. Hope this helps
 
I can well understand OPs query. Years ago when banks etc advertised for deposits it was always x % PER ANNUM. In other words if rate was say 5% you would get 5 pounds if you had 100 on deposit for a full year. Nowadays they quote rates for one month etc and hence APR which aims to tell the depositor what the real annual rate is.
 
Bigmc said:
And dont forget to subtract the dirt to get your real interest rate
Click to expand...

Hay I just got my head around working out the real % rate! now you want me to deduct tax.. Ooo my head is starting to hurt
 
I no it takes abit of work for very small returns! ok so we have worked out your real % rate is 0.87 so lets just say we are talking about a lump sum of €20,000. thats 20,000 x 0.87% = €174 interest. Now the Goverment takes there cut of this to put to great use! Dirt tax is only deducted of the interest you recieve not the whole amount. its €174 x 25% = €43.50.. So its €174 - €43.50 = €130.50 this is what you will recieve on 20,000
 
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