Savings Account Interest -- Help Me Understand

[Anonymous]

So, apparently I do not understand how interest on a savings account works. I apologize in advance if I'm just being totally goofy here for not understanding.

My situation -  I recently opened a savings account with Alliant CU  because they had the highest rate I could find that did not also have a ginormous balance requirement.  Their rate is -- .995%.  Anywhere else I came across was considerably less.  Again. I needed somewhere that didn't require a $10k (for example) minimum balance. Alliant's requirement was that interest starts accruing after the first $100 deposit.   I don't make a lot of money but I want to start saving for a down payment for a house. My goal is $25k and my time frame is 2 years.

So for the purpose of this post I will leave out the month of January since the amounts varied too much and there was not a full month's time involved in the calculations.  Though I will say, my interest for January was 12 cents.

Anyway, I opened the 2nd statement period with an approx $600 balance and closed it with an approx balance of $1,100.  So, in theory  I should have gotten at minimum $5.97 in interest, correct?  That is assuming .995% on a $600 balance for the duration of the statement period. But, really it would have a been a little more, just depending on the additional deposits and how many days interest accrued on those during the month.

I would have been fine with $5.97 and that's what I was kind of expecting when my statement cut the other day.  But, to my surprise and dismay, my interest on my 2nd statement was on $.76. That's 76 cents for anyone who missed it. I have never had an interest bearing savings acct before but that seems wrong to me.  

That's it???? What am I missing?  I am no math whiz but I can figure simple interest.  I even plugged in my numbers into a few simple interest calculators just using the $600.00 and it also shows that I should have accrued $5.97 in interest in on month

I am clearly missing something. Can someone please explain how this works so I can adjust my expectations.  Thanks!

I just verified all of this from my last statement:

Feb 2017 (2/1/2017 - 2/28/2017)

Opening: $605.26

Deposits: $500.76

Ending Balance: $1,106.02

Dividends Earned: $0.76

APR: 1.00%

Deposit Dividend: 0.995%

[Anonymous]

APR and Interest on a Savings account are per year not per month. So talk the .995% interest rate and divide by 12 months that is how much interst would roughly be applied in a month, its a bit more involved in that mathmatically but that will be close.

[Anonymous]

Synchrony Bank has a savings account with no minimum deposit offering 1.05% interest if you really trying to squeeze every penny of interest.

[Anonymous]

Barclays has a Dream Account with a 1.05 APY as well. They also give you a bonus for 1). Making 6 consecutive monthly deposits, and/or 2). Going 6 consecutive months without making a withdrawal. So, it is possible to get both bonuses every 6 months. Each bonus is 2.5% on the past 6 months interest. You're not going to get rich, but it's something! 

[Anonymous]

The most cost effective way to make money from bank accounts is not to try to earn interest.  Even if somebody has $10,000 in a savings account at 1% interest, that's still only $100 per year -- and that's before taxes.

Instead, you may want to consider the hobby of bank bonus chasing.  That's where a bank offers a promotion for opening a savings or bank account with them.  E.g. a $300 promotion.  You open the account, get the $300, then close it maybe six months later.  Yoy can easily make $1000 a year doing that, often much more.

If you want to couple that with high interest savings options, there are some places that offer 5%, though there is typically a ceiling of how much you can put in.  (e.g. 5k)

[SouthJamaica]

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@Anonymous wrote:

So, apparently I do not understand how interest on a savings account works. I apologize in advance if I'm just being totally goofy here for not understanding.

My situation -  I recently opened a savings account with Alliant CU  because they had the highest rate I could find that did not also have a ginormous balance requirement.  Their rate is -- .995%.  Anywhere else I came across was considerably less.  Again. I needed somewhere that didn't require a $10k (for example) minimum balance. Alliant's requirement was that interest starts accruing after the first $100 deposit.   I don't make a lot of money but I want to start saving for a down payment for a house. My goal is $25k and my time frame is 2 years.

So for the purpose of this post I will leave out the month of January since the amounts varied too much and there was not a full month's time involved in the calculations.  Though I will say, my interest for January was 12 cents.

Anyway, I opened the 2nd statement period with an approx $600 balance and closed it with an approx balance of $1,100.  So, in theory  I should have gotten at minimum $5.97 in interest, correct?  That is assuming .995% on a $600 balance for the duration of the statement period. But, really it would have a been a little more, just depending on the additional deposits and how many days interest accrued on those during the month.

I would have been fine with $5.97 and that's what I was kind of expecting when my statement cut the other day.  But, to my surprise and dismay, my interest on my 2nd statement was on $.76. That's 76 cents for anyone who missed it. I have never had an interest bearing savings acct before but that seems wrong to me.  

That's it???? What am I missing?  I am no math whiz but I can figure simple interest.  I even plugged in my numbers into a few simple interest calculators just using the $600.00 and it also shows that I should have accrued $5.97 in interest in on month

I am clearly missing something. Can someone please explain how this works so I can adjust my expectations.  Thanks!

I just verified all of this from my last statement:

Feb 2017 (2/1/2017 - 2/28/2017)

Opening: $605.26

Deposits: $500.76

Ending Balance: $1,106.02

Dividends Earned: $0.76

APR: 1.00%

Deposit Dividend: 0.995%

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Interest rates are so low that it's not even worth worrying about, but the interest rate is per annum, not per month.

[SkyCommander]

I'm interested in getting a new savings account. I have $8400 in a Discover savings account. Though for some strange reason my interest paid DROPPED even though I added more money to it. For a $8300 balance it paid me $6.47 but for a $8400 balance next month it gave me $6.07. Adding $100 more it droped 40 cents which is weird.

[IOBA]

The interest paid per month is based on the number of days IN the month.  February is a short month, so less interest on the same or higher balances.  

[Anonymous]

That, along with if money is added/subtracted from the balance throughout the month, that can affect interest accrued. It is based off of the average daily balance, not just the total sum on the last day.