Posted on July - 31 - 2011
Savings Accounts: How Much Will I Earn?
One of the biggest questions about savings accounts is how much we can actually earn on interest. This is a tricky question to answer, because there are different types of savings accounts, each offering unique benefits and different savings rates. To help you determine just how profitable opening a savings account can be, we are going to take a look at several common scenarios.
To make the calculation easier, we will assume that your deposit amount is ?10,000. You can simply multiply the interest we calculated in this article to suit your own deposit amount, so you should be able to determine just how much you will earn on your savings. The calculations are done using standard compound interest calculation method used by UK banks.
First stop, the conventional easy-access savings account. ING Direct is offering their savings account, with top benefits including 2.96% of gross interest and a superb ?250,000 maximum deposit limit to enjoy. With a deposit of ?10,000, you will be earning ?300.05 in gross interest; after the 20% basic tax, your net return would be ?240.04.
Nationwide BS MySave Online Plus, on the other hand, offers a whopping 3.05% interest; it is considered to be one of the highest paying savings accounts in the country. There is a minimum deposit limit of ?1,000, but the maximum deposit limit is at a generous ?3 million. This means you will be earning a modest $309.30 before tax.
Keep in mind that those two calculations we discussed earlier are based on the assumption that you don’t take out the monthly interest payout at the end of each month. This means the interest payout is added to your account balance. If you plan on taking out the monthly interest payout, then the amount of gross interest you can earn is calculated using the simple interest calculation method.
You can also use online interest calculators to help you see just how much return you will get from your savings account. These online calculators are very handy when you are comparing savings rate, because they allow you to spot the most rewarding savings account without hassle.
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