How much interest will I get after 12 months?

S

samanthajane

Registered User
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Hi, I have a savings account which i am earning 4% on. The max i can save is 500 a month.

If i save 500 a month for the next 12 months, I will have put in 6k.

I think i might be figuring out the interest wrong as by my calculations when the 12 months is up i will have 7813.40 in the account, which means I will get 1813.40

This seems a bit high to me for just savings 500 a month, have i completly got things messed up or am i right?

I basically stared with 500 added 4% then added another 500 to that and add 4% to that total and did this 12 times.
 
I don't know about APRs and all that stuff but 4% simple interest on €6,000 is €240 gross, less DIRT @ 25% leaving you €180 net. Sorry.

(4% is €4 per €100 for a year)
 
clearly i dont know much about it either hahaha

But i wouldn't just get 4% for the year surely as each month i make the payment i would get 4% on the balance.

month 1 -----500, interest @4% = 520
month 2 -----520+500= 1020 interest @4% = 1060.80

And so on and so on.....

And there i was thinking i was getting a great deal lol

180 seems much more likely, wishful thinking i suppose. Ah well will have to go back to my plan of robbing a bank :)
 
Agree with vandriver. A good way to estimate the interest due without considering compound interest is to look at the average balance over 12 months, which is €3,000 in this case. 4% of €3,000 is €120, before 25% DIRT is deducted.
 
I've posted this before method before but I'll update it for the current bits n bobs

A simple way I calculating interest on regular savings account is to take your monthly contribution (€500) and multiply by 6.5. Multiply this final number by the interest rate (4%) and you will get the annual interest that should be accrued to your account (before DIRT).

Why 6.5? Well the in the first month you get a full years interest (12/12) in the second you get 11 months interest on that portion…and so on. 12/12 + 11/12 +…+ 1/12 = 78/12 or 6.5.

So to check:

€500*6.5*4% = €130
Less dirt of 25% should leave you with 97.5.
 
Wow I was about to have a canary there when I first read your post!
What place are you getting 4%? Am with Rabo and interest has dropped significantly.
 
Hi yram,

You can get up to 5% on regular saver accounts. See the best buys thread.

Rabo offer a low 2% for lump sum deposits.

Do you have a lump sum with Rabo? If so, you can get up to 3.55%/3.75% for lump sums elsewhere, you will be financially better off switching from Rabo.
 
yram said:
Wow I was about to have a canary there when I first read your post!
What place are you getting 4%? Am with Rabo and interest has dropped significantly.
Click to expand...


Ha yeah it was too good to be true.

Mine is a 1 year saving with halifax in the UK branch. Not impressed as a few week later it went up to 4.25%. I'll bet all of my 96 ( not 1800 lol ) interest that i wont get that rate again.

At least the kids are doing ok they are on 6%. Might have to start lodging into their account instead, dont have to pay any tax either!
 
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