How is interest on deposits calculated?
We calculate the interest of the deposits after the following formula:
Gross interest* = (Nominal value** x Number of actual days*** x Interest rate) / 360 x 100 |
In other words, the gross interest is the result of the ratio (division) between:
❶⠀„nominal value” multiplied by „the number of effective days” multiplied by „interest rate”(below is what each of them means);
❷⠀and the product of the numbers: 360 and 100.
❗⠀The due interest is related to the calendar year. Thus, the entire equation is divided by 360 (days) and multiplied by 100, to find the exact percentage value of the interest.
Calculation example
But, to make everything as clear as possible, we also come with a calculation example, so that there is no room for ambiguity anymore. 😃
Thus, we consider (by way of example) a deposit:
➤⠀worth 5,000 lei;
➤⠀constituted for 3 months (90 days);
➤⠀with an interest rate of 2.5%.
For such a deposit, the interest calculation would be as follows:
(5.000 x 90 x 2.5) / (360 x 100) = 31.25 gross lei. That is 28.12 net lei (with a tax applied of 10%).
Annotations
*„Gross interest” represents the value of the interest calculated by the bank, according to the formula explained above, before taxation. If we have reached this chapter, it is good to know also that the value „net interest” is equal to the difference (subtraction) between „gross interest” șio„tax in the amount of 10%” (applied to the gross interest).
**„Nominal value” is equal to the amount of the deposit constitution. For example, if you want to open a deposit of 5,000 lei, its nominal value will be 5,000 lei.
***„Number of actual days” represents the number of days elapsed from the establishment date, until the maturity / deposit due date.
PS: If you want to learn more about the interest rate, you can do this by accessing the question „What is the interest rate on loans?”. 😉