Interest payments on bank
Have money, and do not know what to do with it, this happens to many, and one of the alternatives that arise, is deposited in a bank, to pay such money through the interest paid by such banking house.
Learn why, what is the interest paid by banks
Let’s start with the basics first, which is the bank interest, well, is what a bank or credit union pays you to use your money. (In some cases, current accounts pay no interest.)
There are two kinds of interest, the simple and compound. If you want your money grow, you should compound interest for the reason that follows.
Simple interest you pay interest only once a year.
For example, if the interest is 5 percent for each $ 1,000 of interest you’ll get $ 50 ($ 1,000 by 0.05). The following year will get another $ 50 interest, or $ 1,000 for 0.05, plus $ 50 are above $ 1,100 in total. At the end of the tenth year will have a total of $ 1,500.
Compound interest pays you interest for the use of your capital ($ 1,000) plus the interest earned on your account. During the first year, you’ll get the same amount of $ 1,050. But the next year you will pay the interest of the initial capital plus the interest earned ($ 1,050 per 0.05), or a total of $ 1,102.60. At the end of the tenth year will be $ 1,628.89.
Moreover, compound interest is usually calculated every three months, or quarterly, so you pay interest four times a year, which means more money in your pocket.
If you save $ 1,000 and earn 5 percent interest compounded quarterly, will earn almost $ 1,050 or more, $ 5 the first year and $ 14.93 in the next ten years, or a total of $ 1,643.62 .