Interest on Special Term Account.

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Ash 22

Registered User
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For all you mathematically minded out there could you tell me please how bank interest is calculated?
For a 3 year special term account opened on July 07 with 12,000 euro lodged got 391.19 interest to date.
On Oct 1st 108.88 interest added. April 1st 282.31 more was added. Interest rate credit @ 4.600% on Feb 8th it states. Does that sound right. It also states that first 480 earned is free of dirt tax.
 
Yes sounds right. You opened the account in say mid July and got the first interest payment on October 1st so had the 12k @ 4.60% for say 2.5 months (12,000 x 4.60% / 12 x 2.5 = 115.00) close enough to the €108.88 you got.

Interest is obviously paid twice annually so you got your second payment on April 1st (12,108.88 x 4.60% / 12 x 6 = 278.50) close enough to the €282.31.

No DIRT is paid on the above, as you stated above. You should expect your next payment on October 1st (12,391.19 x 4.60% / 12 x 6 = 284.99) although you will pay some DIRT on this as your total interest paid will have exceeded the €480.
 
Trebor thanks very much for that explanation. Makes it a lot clearer. It says the first 480 euro per annum dirt free, does'nt that sound like I still should not have to pay.
 
You will earn another €92.62 (480.00 - 108.88 + 282.31) DIRT free. You will pay DIRT on the rest of the interest.
 
You will earn another €92.62 (480.00 - 108.88 + 282.31) DIRT free. Basically you make 12k @ 4.60% = €552 interest per annum. You pay no DIRT on the first €480 but you pay 20% DIRT on the other €72.
 
Thanks trebor, just wondering does the bank year mean Jan to Dec, Apr to Apr or a year from when you invest initially? I never bothered about this before but I am curious now !
 
Why is there no DIRT on the first €480? Thought you pay DIRT on all interest unless exempt because aged under 16 or over 65!
 
That was the terms of that account. Its a special term account. I opted for 3 years. If you go for 5 years you get 635 euro dirt free.
What gave you the impression that I may not be over 65!!!!
 
Ash 22 said:
That was the terms of that account. Its a special term account. I opted for 3 years. If you go for 5 years you get 635 euro dirt free.
What gave you the impression that I may not be over 65!!!!
Click to expand...

I see. Assumed under 65 because if you were older than that you would be exempt from DIRT on all interest earned, not just first 480!
 
Ash 22 said:
Thanks trebor, just wondering does the bank year mean Jan to Dec, Apr to Apr or a year from when you invest initially? I never bothered about this before but I am curious now !
Click to expand...

The bank year in your case is April to April, with interest also paid at the half way mark, October.


Ash 22 said:
That was the terms of that account. Its a special term account. I opted for 3 years. If you go for 5 years you get 635 euro dirt free.
What gave you the impression that I may not be over 65!!!!
Click to expand...

I'd have guessed you were in or around the 22 mark myself!
 
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