Loan calculators, savings interest, etc.

That’s some serious cash. 😂 Honestly, thanks—I was stuck in this endless loop of debating whether to buy an apartment or just keep renting, so I really needed a second opinion. 😁

But wait, how exactly are you calculating that formula? Where did that extra 20,000 come from? Because looking at these third-party financial statements, it looks more like 206,284, regardless of how many decimals you throw at it. These formulas here the very last page, they don't even specify when interest is calculated, so I guess we're just assuming it's monthly?

hollowlynx5 said:That’s some serious cash. 😂 Honestly, thanks—I was stuck in this endless loop of debating whether to buy an apartment or just keep renting, so I really needed a second opinion. 😁

But wait, how exactly are you calculating that formula? Where did that extra 20,000 come from? Because looking at these third-party financial statements, it looks more like 206,284, regardless of how many decimals you throw at it. These formulas here the very last page, they don't even specify when interest is calculated, so I guess we're just assuming it's monthly?

I suspect the outcome depends heavily on the compounding frequency. It makes a difference whether interest is applied monthly or just once a year. If it's annual, interest only hits the principal at year-end. If it's monthly, January's interest starts working for you almost immediately.

Consider this example:
http://www.zinsen-berechnen.de/sparrechner.php
The tool allows you to toggle between monthly, quarterly, and annual compounding.
If you compare monthly against annual compounding, you will see a final difference of roughly $20,000.

Sure, I get it, it’s just... how the hell did they actually arrive at that number? It’s all a bit fuzzy. In those links I shared earlier, there isn't any specific breakdown of how they calculated the totals, so I’m assuming they're settling up at the end of the period—you know, monthly in this scenario. But then I started messing around with those calculators, right? If you run the math on an annual basis, you get 197,000, but if you switch to monthly, it jumps to 226,000. And that 206 figure? None of these EFZG formulas seem to touch it. Not even close. 🤷

Forget those basic online calculators—just use Excel instead, you can really mess around with the numbers there.
If you use the FV (future value) function with compound interest (meaning we aren't just doing simple math—that’s why I threw in that POWER function... you end up with $206,284.33

=FV(POWER((1+annual_rate%/100);1/12)-1;months_of_payments;-monthly_payment)

I guess if you just go with simple interest (like monthly = annual/12), which is what Excel does by default, you get something like $226k.

Thanks 👍

Is there a specific formula where I can plug in fixed variables—like a monthly contribution amount (always constant), an annual and semi-annual interest rate, plus the total duration of the savings period—to calculate the final balance?

If you take x as your monthly deposit, p as the actual monthly interest rate (expressed as a decimal, so use 0.05 for 5%), and n as the number of months you've been saving, the total balance after your last interest calculation but before the n+1 payment will be

x*(1+p)/p*((1+p)^n-1)

While this isn't perfectly exact when dealing with semi-annual or annual rates, it’s close enough for most practical purposes. I don't see much point in overcomplicating things with more complex formulas unless absolutely necessary.

Honestly, you’d probably find it easiest to just run this through Excel using the 'FV' function.

If you get stuck—just give me a shout! 🙂

Does anyone know what the interest rate is on an overdraft at JPMorgan Chase? If the rate is say 12% and I'm overdrawn by $500, would they charge me $6.00 per month?

Aloha. I placed a relatively small amount of AUD into a three-year CD with monthly interest payouts sent directly to my foreign currency account... it’s been a few months now, and while the interest is being calculated and deposited quite reliably, I’ve noticed a strange quirk. If I were to decide to break the CD early, the bank treats the interest already paid out as a negative balance against the principal...

For instance: a $10,000 AUD CD
Interest adjustment: -$60 AUD

Total payout if I terminate the CD early: $9,940 AUD.

My question is this: Does anyone understand why the bank is accounting for the interest as a negative figure? It seems nonsensical to me—the months have passed, the interest was earned for those previous months, and it was already paid out... I don't see any logical reason for them to still be showing it as a deduction...

I actually have a few other CDs in Euros with quarterly payouts, and everything there works perfectly fine... after three months, the bank pays the interest, and then the interest just continues to accrue normally. If I chose to close those savings accounts, they wouldn't show the interest as a negative debit like this...

thanks 🙂

It’s probably because you’re looking at two different beasts entirely—you’ve got one interest rate sitting there for a three-year term, and then a totally different rate for just a single month. If you decide to pull the plug early, that's when the whole thing shifts from a simple arrangement into a full-blown loan scenario.

neonwalker25 said:It’s probably because you’re looking at two different beasts entirely—you’ve got one interest rate sitting there for a three-year term, and then a totally different rate for just a single month. If you decide to pull the plug early, that's when the whole thing shifts from a simple arrangement into a full-blown loan scenario.

I’m not entirely sure I follow your logic. I currently hold a few USD certificates of deposit set for three years—with interest paid out every three months. Once that three-month window closes, the bank pays the interest, and then the interest starts accruing from zero again for the next quarter (so the interest grows steadily)—until the next payout hits. If I decide to liquidate these USD CDs before the full three-year term is up, I get my principal back in full, plus whatever interest has accumulated during that final three-month stretch.

The situation with the USD accounts is quite different—they pay out interest monthly, but if I want to close the account early, they just deduct the interest already paid from my principal amount.

Are you suggesting that when the bank pays out monthly interest, they are effectively giving me an advance—almost like a small loan?

Thanks,

The interest rate for a three-year CD is naturally higher than a one-month term—it’s basic math. They basically fronted you the interest on the condition that you kept the funds locked in with them for the full three years; since you only made it through three months, they're going to calculate the actual interest earned for that period and then claw back the overpayment from your principal balance.

Alright, so neonwalker25 finally laid it all out for us.

Back when I was in college, I was on a scholarship sponsored by a firm based out of Chicago. I held that scholarship from January 2008 through June 2010. For the first five months, I was receiving $300, followed by $400 per month for the remainder of the term. Once that final check cleared, I was supposed to start working for them—though I did manage to negotiate a bit of a delay. In the interim, I wasn't receiving any further funding.

The deal with the company is pretty blunt: I either start working for them now, or I pay back the entire amount with a 15% annual interest rate. Could someone help me run the math so I know exactly what I’m looking at? Unfortunately, my understanding of interest-bearing accounts is... lacking...

Thanks!

The interest rate can't be 15%. For you, the cap is 14%.

≈ $3,500 if I haven't miscalculated...

MAXIMUM CONTRACTUAL INTEREST RATES

► Between parties where at least one isn't a business entity (default late interest rate) = 12%

STATUTORY LATE INTEREST RATES:

► All other relationships (7% + 5 percentage points) = 12%

"Other relationships" covers basically everything else... cases where at least one party isn't a merchant, dealings between a business and an individual, government agencies vs. individuals, two public entities, or just two regular people. It even applies to businesses if the deal isn't strictly commercial, or any kind of relationship outside the actual contract... it's everywhere.

Can someone give me a ballpark figure on what kind of interest I’ll pull from a $5,000 deposit? Specifically, I need to know what my monthly interest rate is going to look like.

Carl Brooks2 said:Can someone give me a ballpark figure on what kind of interest I’ll pull from a $5,000 deposit? Specifically, I need to know what my monthly interest rate is going to look like.

What do you mean by "put" in the bank, though...

Are we talking about a CD, a high-yield savings account, or something else?
And do you have a specific bank in mind—like Chase or Wells Fargo—or does it not really matter?

Carl Brooks2 said:Can someone give me a ballpark figure on what kind of interest I’ll pull from a $5,000 deposit? Specifically, I need to know what my monthly interest rate is going to look like.

0.25%