How is interest on deposits calculated?
We calculate the interest on deposits according to the following formula:
Gross interest* = (Nominal value** x Number of effective days*** x Interest rate) / 360 x 100 |
In other words, gross interest is the result of the ratio (division) of:
❶⠀"face value" multiplied by "number of effective days" multiplied by "interest rate" (see below what each of these means);
❷⠀and the product of the numbers: 360 and 100.
❗⠀Duty due is related to the calendar year. So the whole equation is divided by 360 (days) and multiplied by 100 to find the exact percentage interest.
Calculation example
But to make it as clear as possible, we also provide an example of a calculation so that there is no room for any further confusion. 😃
Thus, consider (by way of example) a warehouse:
➤⠀to the value of 5,000 lei;
➤⠀constituted for 3 months (90 days);
➤⠀with an interest rate of 2.5%.
For such a deposit, the interest calculation would look like this:
(5,000 x 90 x 2.5) / (360 x 100) = 31.25 lei gross. That is 28.12 lei net (with 10% tax applied).
Notes
* "Gross interest" is the amount of interest calculated by the bank, according to the formula explained above, before tax. If you have reached this point, it is also good to know that the amount of "net interest" is equal to the difference (subtraction) between the "gross interest" and the "10% tax" (applied to the gross interest).
** "Nominal value" is equal to the deposit amount. For example, if you want to open a deposit of 5,000 lei, the nominal value of the deposit will be 5,000 lei.
*** "Actual number of days" means the number of days elapsed from the date of establishment to the day of maturity/due date of the deposit.
PS: If you also want to know more about interest rates, you can do so by visiting the question "What is the interest rate on loans?".😉
