...or calculate the average balance for the year;lave48 said:I have an account that pays 2.1% per annum. The amount in the account has varied over the year due to withdrawals. My question is what is the formula for working out the interest due to me over the year? Many thanks in advance Lave48
The formula for calculating interest on an account with a 2.1% annual interest rate is:
Interest = Principal x (Annual Interest Rate/100)
To calculate the interest earned on an account with a 2.1% annual interest rate over a specific period of time, you can use the following formula:
Interest Earned = Principal x (Annual Interest Rate/100) x Time (in years)
Simple interest is calculated only on the initial principal amount, while compound interest is calculated on the initial principal amount plus any accumulated interest. This means that compound interest will result in a higher return on investment compared to simple interest.
The frequency of compounding interest on an account with a 2.1% annual interest rate can vary depending on the financial institution. It is important to check with your bank or financial institution to determine the specific compounding frequency for your account.
Yes, the interest earned on an account with a 2.1% annual interest rate is considered taxable income and must be reported on your tax return. However, if the interest earned is below a certain amount, it may not be subject to taxes. It is important to consult with a tax professional for specific information regarding your tax obligations.