Bank deposits are the most demanded product on the market. In this article, we will consider one of the frequently asked questions among ordinary people: «how to calculate the interest on a deposit yourself?»
There are several options for calculating interest on a deposit. Let’s look at each of them with examples.
1. Simple interest (term deposit)
Most often, bank deposits are classified as «term». This type of deposit is the most popular among the population due to the largest percentage of the entire line of banking offers.
However, for such generosity from the bank, customers must accept the following conditions:
- Inability to withdraw funds partially for the entire duration of the contract;
- Without replenishment;
- Interest is accrued once at the end of the term (without capitalization);
Example 1. Term 1 year, rate 8% per annum
The deposit has a rate of 8% per annum, without replenishment and is opened for a period of 1 year. In this case, the interest on the deposit can be calculated on any calculator by multiplying the starting amount by a factor of 0.08 (8%).
The formula for calculating interest on a deposit for 1 year:
Interest = Amount × 0.08
For example, if the amount was 200 thousand rubles, then the profit for the year will be 16 thousand rubles, and the total amount will be 216 thousand rubles.
Naturally, depending on the deposit rate, it is necessary to multiply the amount by different amounts.
Example 2. Term six months, rate 9% per annum
A slightly more complex example. Now the term is six months with a rate of 9% per annum. Most likely, the number 181 days will be indicated in the bank deposit agreement, which is a little less than six months. Therefore, it will be necessary to calculate the percentage taking into account this nuance.
The formula for calculating interest for six months:
Interest = Sum × 181/365 × 0.09 = Sum × 0.04463
If our amount was 95 thousand rubles, then for 181 days the profit will be 4239.86 rubles.
This formula uses a ratio of 181/365, since our deposit will lie 181 days out of 365 days. Similarly, you can calculate the interest on a deposit for any period up to a day.
Example 3. Term 145 days, rate 8.7% per annum
Many banks allow you to open a deposit not only for exact terms by months, but also by days. For example, this can be done in Sberbank and Finam Bank. This is convenient for customers.
In our example, we open a deposit for 145 days at a rate of 8.7% per annum.
The formula for calculating interest on a deposit by day:
Interest = Sum × 145/365 × 0.087 = Sum × 0.0345
Instead of 145 days and a rate of 8.7%, you must substitute your data.
2. Deposits with capitalization (managed deposits) — interest calculation
Capitalized deposits have slightly lower interest rates. This is due to the fact that the interest accrued for the month is transferred to the same account and thus the amount grows faster. The next month, the profit will be higher, since the amount on the deposit has become larger.
For such deposits there is an important concept: «effective interest rate».
Effective interest rate (EPS) is the actual annual percentage that will be earned on the deposit. It will be more than the original percentage, since the calculation is based on «compound interest».
Such a concept takes place only for deposits with capitalization.
For example, they put 100 thousand rubles at 12% per annum with a monthly capitalization. In one month, the account will have an amount of 101 thousand rubles, and already it will lie at 12% per annum.
After 2 months, the amount will already be 102.01 thousand rubles (instead of 102 thousand rubles). Since the earned 1000 rubles in the first month will also accrue interest at 12%.
To calculate compound interest, it is best to use online calculators, since it will be problematic to calculate them on a piece of paper. Although it’s not that difficult.
For our example, we just need to multiply 100 by (1.01)12. Simply put, multiply 1.01 by itself twelve times. To simplify your task, you can use the function in the calculator exponentiation to an arbitrary power: xy.
Retirement contributions, on average, give a little more than ordinary ones.
3. Tax on income from the deposit
Since 2021, a tax has appeared on income from deposits exceeding 1 million rubles. There are also two conditions when there is a mandatory tax:
- If the deposit rate is higher than the key rate by 5 basis points;
- For foreign currency deposits over 9% per annum;
If one of the two conditions is met, then only excess income is taxed. The tax rate is 30% for Russian residents and 35% for non-residents.
For example, if the key rate of the Central Bank is 8% and the bank deposit is 15%, then the excess is 2% (8% + 5% = 13% — the maximum possible rate without tax). 2% income will be subject to tax.
The current key rate of the Central Bank is 9.50% (updated on June 10, 2022).
4. Calculation of interest on deposits in leap years
In a leap year, 1 business day more (366). This imposes some nuances on the calculation of interest. Let’s consider two options.
1 The deposit is open in a leap year and closes in the same year. Then there are no difficulties. You just need to divide the number of deposit days by 366.
Profit = Amount × [Число дней]/366 × rate
2 If the deposit lies part of the year in a leap year and part in a non-leap year. For example, a deposit opens on September 1, 2016 for 181 days. The rate is 8%. The calculation will have to be divided into two stages:
Profit = Amount × (122/366 + 59/365) × stake
You need to count the number of days in a leap year and divide by 366. The remaining days will not be in a leap year, so divide by 365.
5. Online interest calculator
On the Internet you can find many sites that offer to calculate the interest on the deposit. In each of them, you need to set the following parameters:
- Amount (this is understandable);
- Capitalization (if interest is accrued monthly, then check the box);
- The amount of additional contributions;
There are also several types of calculators on this site.
After that, the calculator will give a detailed account statement, which will allow you to predict the family budget in advance.