The True Price Of Money (savings interest calculator)

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savings interest calculator

Everything costs something, even money. The price of money is the interest paid. In the case of your “idle” funds (savings account, money market, CDs, savings bonds, etc.), you want to be paid for someone else using them. When you borrow money (mortgages, car loans, credit cards, etc.) the bank wants be paid for your privilege of using their money.

It is important that you know the interest rate you get or pay for money. If you know what that true interest rate is, it is easy to make a comparison with other loan or savings sources.

The False Price Of Money

The problem is that you don’t always know the true interest rate. Banks and other financial institutions will often quote rates that are not the true interest rate. Their motive is to make their offering more attractive than it really is. Following are a few of their deceptive practices:

1. Points on a real estate loan. Points are, in reality, a form of interest. The interest rate quoted for the loan does not take into account the points. If you refinance or sell your home after just a few years, the points will make a significant increase in the real interest rate price of the loan.

2. A very low teaser rate for a fixed time. A local car dealer offers low interest and low payments. However, after 3 months the interest rate and the payment amount triples. The real interest rate can exceed credit card rates.

3. Credit card companies offer 0% interest for 6 months to 12 months for transferring your debt to them. At the end of that 0% period or if you are late on a payment (or even another creditor’s payment), the interest rate goes to their maximum rate of 25%+.

4. The worst offenders of all, are the payday or check cashing companies. They don’t state an interest rate, just a dollar amount. Their true interest rates can be as high as 500% annualized. Those are higher rates than the Mafia loan sharks charged in the 1930s.

5. When advertising rates for a savings account or a CD, banks will often quote an annualized rate. If the funds are not in the savings vehicle for more than a year, then the real rate you will receive will be less due to compounding. It should also be noted that if you withdraw funds from a CD before maturity, the bank will charge you an interest penalty, which will lower your rate of return.

In order to protect yourself from unscrupulous practices, you need to use a simple interest calculator to find the true interest rate on every loan or savings transaction. When you know the true interest rate, you can easily make a comparison with alternative sources to find the best deal.

Using A Simple Interest Calculator

Financial calculators are available online. They make it easy to input your data to calculate what interest rates you are paying or receiving. There are 3 kinds of calculators that you need:

1. A loan payment calculator. When you enter the required inputs of principle, term of loan, and interest rate, you will get a monthly payment. This is a good quick check to determine if the interest rate is correct. (Be sure to subtract all up front fees, such as points, from the principle .)

2. An interest rate calculator. This is similar to the above. However, you must input the monthly payment. The output will give you the true interest rate for the loan.

3. Compound interest calculator. When you enter the savings rate and the frequency of compounding (monthly, quarterly, etc.), the calculator will return the annual interest rate.

Conclusion

With these tools available you will know what the true interest rates are. You will be able to compare rates in order to make the best decisions for your financial future.

Article Source: http://EzineArticles.com/?expert=Dee_Reavis

savings interest calculator

Savings Account Calculators Yield Your Financial Future (saving interest calculator)

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Saving interest calculator

Preparation on savings for the future? Great. Choosing to use a savings account calculator will be one wisest choices you make. To take the mystery out of how much money you stand to expand by placing a exacting amount of money in interest bearing savings or in an investment plan, you can use one of the many available savings calculators which take into consideration lots of different factors and give you a look at your future potential earnings. They can help you determine your planned, present or future earnings, allowing you to customize for your personal financial situation and objectives.

First of all you will need to enter details into the calculator of how much money your initial investment will be and any extra payments which you intend to add to the starting balance over a period of time at regular intervals. When calculating the final sum of money to be earned, the savings account calculators offering the option of additional contributions will assume the extra payments are to be added at the start of the period stated.

The next phase is to define the quantity of time you intend the investment to run, earning you interest in the account, and enter this into the savings account calculator.

Each savings account or investment occasion has a certain annual rate of return and this should be the next piece of information you detail into the equation. Stated as the APY (Annual Percentage Yield) this is what directly affects your earnings. You will find that the APY will differ from institution to institution so make sure to pay special attention to this.

Another aspect and very important one, which you may consist of a savings account calculator is the compounding of earnings. Compounding means the further earnings made on the interest already accrued on the investment. This reflects the power of compounding. With compound interest, you earn interest on the money you save and on the interest that money earns. Over time, even a small amount saved can add up to big money. Being aware of the rate of compounding when using a savings account calculator will assist in accurately predicting just how much interest will be made over any given time span.

Depending on the type of savings or investment you choose the variables may change but a calculator specifically for savings will allow you to input variables and give you a good look at your future earnings. Now, online you can compare the different savings and investment products with the click of a mouse. When you need to make a comparison of rates being offered by different institutions of finance, in order to achieve the maximum benefits for your contributions, a savings account calculator is an invaluable and easy to use tool.

Article Source: http://EzineArticles.com/?expert=Rhonda_Strump

saving interest calculator

Savings Interest Calculator Variables You Need To Know (savings interest calculator)

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Savings Interest Calculator

Savings Interest Calculator does not take one having intuitive capabilities to see that our global market is progressing towards greater technology. The ease of online banking as well as its low overhead is creating more banking institutional options online. One such option is the internet savings accounts.

While savings interest calculator are a great financial tool, there are many that create variables in the results presented.

The first variable of savings interest calculator that needs description relates to how much money will be invested including the starting amount and any additional contributions over time. The initial deposited amount or starting balance entered in a savings interest calculator describes the amount first invested or saved.

Savings interest calculator additional contributions describe the amount of money that is to be added to the savings account over a defined amount of time. Savings interest calculator that use additional contributions as an option when calculating the final amount of money earned typically assume that the additional contributions will be added at the beginning of the stated period.

The second of savings interest calculator variable that needs to be defined is the amount of time that the investment will be earning interest in the account.

The rate of return is the third variable of interest when using a savings interest calculator. The rate of return is influenced by the unique annual interest-bearing rate associated with the account.

A fourth of savings interest calculator variable that is highly contentious and differs from account to account addresses the issue of compounding interest. If offered, compounding interest can rapidly build the balance of the account over time, generating much more money earned that previously thought. Knowing the rate of compounding is essential knowledge to have when using a savings interest calculator because it helps to accurately predict how much interest will be gained or given to a consumer over a certain amount of time.

In the case of savings interest calculator, years is the total number of years that a person plans to make savings or the investment. Using a savings interest calculator can help estimate gains on an investment based on the initial investment, the period of time saving, and the annual percentage yield. Thus, the savings interest calculator demonstrates to a person how exactly his savings strategy would work and how he can make the best use of it. The savings interest calculator can always be found at the websites of financial institutions or banks etc.

Using a savings interest calculator can be a helpful tool when comparing rates of different financial institutions to find the most lucrative source for maximum savings contributions.

While you are doing a research on savings interest calculator, try to get to the essence of what you are trying to find out. It is true of mundane areas as well. As you search for information about this subject, try and reach the best value, definitions and lucidity.

Savings interest calculator