interest rates on savings accounts

  • Thread starter Thread starter Kim
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K

Kim

I am trying to set up a savings account for my son in excel. I started one
for him at ING and would like to be able to figure out how to get the
interest rate monthly and cannot figure it out. I have looked at the various
financial functions and none seem to be what I need. Any help in this area
would be greatly appreciated
 
ING posts their interest rates. This is public information. What would you
need to figure out?

If you're trying to change an annual rate to a monthly rate, simply divide
by 12.

If you need something else, tell us the data you have (eg, list of deposits
and withdrawals), and what result you are looking for.

Regards,
Fred.
 
ING posts their interest rates.
[....]
If you're trying to change an annual rate to a monthly rate,
simply divide by 12.
Click to expand...

Well, that might depend on the jurisdiction of the OP.

When I go to the ING Direct web site for US clients, the rates are
quoted as APYs. Normally, that is a compounded rate. And since the
(US) savings and CD accounts are FDIC insured, the rate called "APY"
must be a compounded rate, computed according to the method in the
Truth In Savings regulation.

In that case, the monthly rate can be computed by either of the
following equivalent formulas (using 3.4% as an example):

rate(12, 0, -1, 1+3.4%)

(1+3.4%)^(1/12) - 1

But if the rate is called an "interest rate", that is a non-compounded
rate as you describe, according to the TIS regulation.
 
Good clarification, Joe. As banks post "interest rates" in Canada, dividing
by 12 to get the monthly rate is what's required.

Buy you're right, if it's an "APY", you need the Rate function.

Interestingly, in checking this out, I came across the ING Canada website
which says if you save $100 per month at 3.65% (today's rate), you will have
a whopping $1120.28 saved after a year.

Most people would think that if you save $100 for 12 months, you'd have at
least $1200 in the bank. But not at ING. They must think there's only 11
months in a year, even though they credit interest for 12.

Even big banks don't understand saving and interet rates very well.

Regards,
Fred.

ING posts their interest rates.
[....]
If you're trying to change an annual rate to a monthly rate,
simply divide by 12.
Click to expand...

Well, that might depend on the jurisdiction of the OP.

When I go to the ING Direct web site for US clients, the rates are
quoted as APYs. Normally, that is a compounded rate. And since the
(US) savings and CD accounts are FDIC insured, the rate called "APY"
must be a compounded rate, computed according to the method in the
Truth In Savings regulation.

In that case, the monthly rate can be computed by either of the
following equivalent formulas (using 3.4% as an example):

rate(12, 0, -1, 1+3.4%)

(1+3.4%)^(1/12) - 1

But if the rate is called an "interest rate", that is a non-compounded
rate as you describe, according to the TIS regulation.
 
I know that ING info is public. I am trying to set up a spreadsheet so my
son can see how much intererst he gets on his acccount. I will take their
APY of 3.40% and divide that by 12 and see what happens.


Thanks
Kim
 
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