Term interest capitalization is used when making a deposit and means that interest will be added to its body with the frequency specified in the conditions and in the future the interest rate will be charged not only on the client's funds themselves, but also on accrued income. The frequency of adding interest to a deposit may differ from bank to bank, but the most commonly used are daily, monthly, quarterly, annually.
An alternative is the condition when the accrued interest is transferred to the client's account or card, and he can use the money by withdrawing it from an ATM or receiving it at the bank's cash desk. Under the condition of capitalization, the income and the total value of the deposit become larger. Moreover, the shorter the frequency of interest accrual or the longer the term of the deposit, the greater the difference in income between deposits with and without capitalization.
Income on a deposit with interest capitalization in the general case can be represented by the following formula:
D \u003d B x (1 + P) \u003d T, where
D - income on the deposit;
B - the amount of the deposit;
P - interest rate for one period for which interest is charged;
T - the number of periods for which funds are placed.
As for formulas different periods accruals, we will consider them below.
Deposits with daily capitalization
Such conditions are usually used in deposits with short terms (from several days to a couple of months) and in this case the accrual formula will look like this:
D \u003d B x (1 + P / 365) ^ T, where
D - income on the deposit;
B - the amount of the deposit;
T is the term of the deposit in days.
For example, let's take two identical deposits in the amount of 100,000 rubles and an interest rate of 10% per annum, the placement period Money- 5 years. On a deposit without capitalization, we will receive an income equal to 50,000 rubles, and with capitalization - 61,051 rubles. As you can see, the difference was more than 11,000 rubles. In the case of quarterly interest, this difference will be even greater. Calculations for the example are presented in the table below:
| day | without capitalization | with capitalization | ||
| Money in deposit | accrued interest |
Money in deposit | accrued interest |
|
| 1 | 100 000,00 | 27,40 | 100 000,00 | 27,40 |
| 2 | 100 000,00 | 27,40 | 100 027,40 | 27,40 |
| 3 | 100 000,00 | 27,40 | 100 054,80 | 27,41 |
| 4 | 100 000,00 | 27,40 | 100 082,21 | 27,42 |
| 5 | 100 000,00 | 27,40 | 100 109,63 | 27,43 |
| TOTAL | 137,00 | 137,06 | ||
As we can see from the example, there is a small, but still, benefit from using capitalization.
Monthly capitalization
In the case of monthly capitalization, the calculation formula will be as follows:
D \u003d B x (1 + P / 12) ^ T, where
D - income on the deposit;
B - the amount of the deposit;
P - annual interest rate on the deposit;
T is the term of the deposit in months.
Let's apply this formula to the previous example. You can see the calculation in the table below:
| month | without capitalization | with capitalization | ||
| Money in deposit | accrued interest |
Money in deposit | accrued interest |
|
| 1 | 100 000,00 | 833,33 | 100 000,00 | 833,33 |
| 2 | 100 000,00 | 833,33 | 100 833,33 | 840,28 |
| 3 | 100 000,00 | 833,33 | 101 673,61 | 847,28 |
| 4 | 100 000,00 | 833,33 | 102 520,89 | 854,34 |
| 5 | 100 000,00 | 833,33 | 103 375,23 | 861,46 |
| TOTAL | 4 166,65 | 4 236,69 | ||
As you can see, in this case, the difference was already quite a tangible amount.
Quarterly capitalization
The formula for calculating income on a deposit with a quarterly capitalization will look like this:
D \u003d B x (1 + P / 4) ^ T, where
D - income on the deposit;
B - the amount of the deposit;
P - annual interest rate on the deposit;
T is the term of the deposit in quarters.
| quarter | without capitalization | with capitalization | ||
| Money in deposit | accrued interest |
Money in deposit | accrued interest |
|
| 1 | 100 000,00 | 2 500,00 | 100 000,00 | 2 500,00 |
| 2 | 100 000,00 | 2 500,00 | 102 500,00 | 2 562,50 |
| 3 | 100 000,00 | 2 500,00 | 105 062,50 | 2 626,56 |
| 4 | 100 000,00 | 2 500,00 | 107 689,06 | 2 692,23 |
| 5 | 100 000,00 | 2 500,00 | 110 381,29 | 2 759,53 |
| TOTAL | 12 500,00 | 13 140,82 | ||
As we can see, the difference between a deposit with and without capitalization has already amounted to more than one thousand rubles.
Annual capitalization
For deposits with annual capitalization, the calculation formula will look the most simple:
D \u003d B x (1 + P) \u003d T, where
D - income on the deposit;
B - the amount of the deposit;
P - annual interest rate on the deposit;
T is the term of the deposit in years.
For example, let's take the same conditions for a deposit. Calculations for the example are presented in the table below:
| year | without capitalization | with capitalization | ||
| Money in deposit | accrued interest |
Money in deposit | accrued interest |
|
| 1 | 100 000 | 10 000 | 100 000 | 10 000 |
| 2 | 100 000 | 10 000 | 110 000 | 11 000 |
| 3 | 100 000 | 10 000 | 121 000 | 12 100 |
| 4 | 100 000 | 10 000 | 133 100 | 13 310 |
| 5 | 100 000 | 10 000 | 146 410 | 14 641 |
| TOTAL | 50 000 | 61 051 | ||
At the same time, for five years the difference between the two deposits amounted to more than 11,000 rubles.
In addition to the periods of capitalization accruals discussed above, banks can offer others, for example, once every six months, once every 10, 20, 100, 200, 400 days. Here, the conditions are limited only by the imagination of bank employees responsible for deposit programs.
Pros and cons of capitalization
But with such a plus as increased income, deposits with capitalization have a certain minus. When transferring interest to a card, a bank client can use the money received at any time, while under the condition of capitalization, all income remains in the bank until the last day and can only be taken at the end of the deposit agreement.
Capitalization calculation in Excel
On our website you can download a form for calculating a deposit with capitalization in Excel. By substituting your data there, you can see your income on the deposit. In addition, the form allows you to make calculations taking into account partial withdrawal funds and replenishment of the deposit.
The capitalization condition is quite serious when choosing a deposit, it determines what income will be received in the end, so it must be taken into account. To compare different investments, you can use our selection form, and to calculate the income on them - calculator. Also on the pages of our site you can view and select deposits with daily, monthly, quarterly and annual capitalization.
What is the capitalization of the contribution and 3 disadvantages of capitalization. What can the conditions of a bank deposit depend on? What are the terms for calculating interest on a deposit? How to choose a profitable bank deposit?
A deposit is one of the most common ways to store money.
In order for the amount not only to lie at home, under the mattress, but, it is usually put in financial institution under a certain percentage.
Thus, capital is partially insured against depreciation. Or at least it is stored in safe place, and all the time is "in work".
There are different deposits, and each bank offers its own conditions. Usually, the choice of conditions depends on the term and purpose of such investments.
One of the not unimportant characteristics of a bank deposit is the periods in which the client can make a profit, this is what defines the concept, what is capitalization of a deposit.
Capitalization of the deposit - what is it?
What is the capitalization of a contribution in simple words?
Capitalization of a deposit is a type of calculation and accrual for the amount that was deposited into the account.
More precisely - the accrual of income not at the end of the selected period, from the initial amount, but throughout the entire period at certain stages.
For example, quarterly, when the dividend is accumulated in stages, four times a year. Each time it is calculated not from the initial amount, but from the one to which a certain share has already been accrued.
To make it more clear, you can parse this with an example:
Let's take an initial capital of 1,000,000 rubles, which was deposited in a bank, at 12% per year.
At the same time, we will choose the rate of monthly crediting on the deposit. Every month, the amount in the account will increase by 1%.
In the first month, 10,000 rubles will “fall” into the account. As a result, we get 1,010,000.
IN next month 1% will also be charged, but it will no longer be 10,000, but 10,100.
And so on every month.
The general formula by which the transfers are made looks like this:
For example, the same 100,000 rubles, and if we take interest rates in 10%, 15% or 20%.
In half the cases, choosing the type of investment with the condition of monthly crediting to the account, but not with such a high percentage, you can get more than in the case of the annual accrual, but with a higher bank rate.
"Pros and cons" of capitalization of deposits
The advantages of such a proposal would seem to be obvious. At a minimum, we saw this in the example above.
However, as in many other financial situations, there are some drawbacks.
Among the minuses, the following points can be distinguished:
- In case of premature withdrawal of investments in full (termination of the contract for a certain duration), the investor receives a completely different dividend, which depends on the current accounts in the selected institution.
Even if credits occur frequently, they can be withdrawn only in certain deadlines specified in the contract.
But this is a dubious minus, since it confuses not everyone.
Compound interest is not always more profitable than the standard method of calculating the income rate, since such a rate is usually lower, so it is not always worth choosing a deposit with a complex calculation.
It is better to analyze all offers and choose the most profitable one, which will allow you to get the most.
Where else can capitalization and its types occur?
1. On a loan (credit).
Of course, in the case of bank investments, compound interest works to the advantage of the depositor, if he correctly calculated and understood the conditions.
But sometimes such a factor as capitalization is not positive. For example, in the case of lending.
Often there is such a situation when a person takes not such a huge amount, but pays it for a very long time. During this period, it would be possible to repay the debt in full a long time ago, however, sometimes only half is repaid.
This is where compound interest comes in.
In this situation, the following picture is obtained: every month the initial amount grows by a certain percentage. What does it mean - the overpayment is calculated from the amount with the interest already accrued.
This is far from the most profitable terms lending, since in this case the overpayment can be reduced only by paying off the debt as soon as possible.
2. On the market (market).
This process can be traced almost everywhere in the economy, for example, in the market.
If we are talking about market capitalization, then we can consider the calculation money growth a certain area of the economy, industry, or even a single company.
If you choose the activity of a certain enterprise, then, with the help of its accounting report, you can see the increase or decrease working capital of this firm.
In order to get the true picture, it is necessary to take into account only the capital owned by the enterprise itself, excluding all borrowed funds from calculations.
Market capitalization has nothing to do with deposits but it reflects General characteristics this process.
How to choose the optimal conditions for bank investments?
What are the periods for crediting dividends on a deposit?
All the intervals through which the bank credits income are selected and offered by the bank itself. The depositor accepts or rejects the conditions offered by the bank.
There are such periods of accrual of income at the rate:
- One-time credit- the most unprofitable capitalization, since, in fact, there are no internal accruals, only at the end of the deposit period.
- Monthly capitalization- the most suitable for a short deposit period, as the interest drops every month.
- Daily is a very rare occurrence, since this type of deposit will be very profitable for the depositor, but very unprofitable for the bank.
Enrollment annually- brings insignificant income, if we are talking about a short period of time (2-3 years).
If we consider a longer period (for example, from 5 years), it can turn out to be a very profitable solution.
Quarterly capitalization– this option is more profitable and convenient for those who are interested in a short-term deposit.
The reason is that a certain percentage, according to the rate, will drip every 3 months.
What are the main points to pay attention to?
After analyzing all the offers and benefits, have you already decided that the type of deposit with compound interest growth is right for you?
Still, you need to take into account additional nuances that may affect how profitable this deposit will be.
List of nuances that should always be discussed with a bank employee:
- What will be the interest rate if capitalization is not taken into account?
- Terms and periods of accruals on the amount of investment.
- How will interim interest be calculated?
You need to understand that interim dividends can be credited to a separate account, which means that the initial deposit amount will not change during the selected period.
And at the end of the period, only the total interest on the deposit from the original amount is charged.
Or, as in the calculations above, intermediate charges can be added to the initial capital and, as a result, a further percentage will be calculated from the total amount.
Conclusion on what is the capitalization of the contribution and the short advantage
From the foregoing, we can conclude that such a phenomenon as capitalization still has more pluses than minuses.
This type of investment is designed for those people who are interested in income stability, as well as the desire to receive maximum amount for the shortest period.
If we are talking about raising money for the purpose of buying real estate or other high-cost purposes, then the deposit, which takes into account investment capitalization is exactly what is needed.
However, there are areas in which it is not only a positive moment. One of them - . Interest capitalization in lending is also growing rapidly, as well as interest in a long-term deposit.
Just about the complex. What is the capitalization of a deposit?
How it works? Details in the video:
However, in the case when a deposit with capitalization is decisively chosen, you need to carefully select the conditions, since it is very difficult to find a bank that offers high percent on fair terms...
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Some people think that the only important criterion for choosing a bank deposit is the interest rate. But this is not entirely true, the interest rate is certainly important factor, but do not forget about other parameters.
Today we will talk about the capitalization of interest. What is it, and why is it so important and good? Any mathematician or financier will tell you that capitalization is a compound interest, which is calculated by the formula:
P= N*(1+(Y* J/100* T)) A, Where
- - the initial amount of the deposit;
- — the total amount of the deposit;
- - percentage annual rate;
- — the number of days in the capitalization period;
- - the number of days in a year (365 or 366);
- — the number of capitalization processes;
Don't be afraid, it's better to immediately send such a financier or mathematician to the bathhouse and hide the formula away ... We translate into Russian. Capitalization of the deposit- this is, just, the automatic addition of the amount of interest to the deposit. Thus, in the next period, interest will already be accrued on the deposit amount +% for past period. And so on until, in fact, your contribution is over.
Let's say you opened a deposit on June 1 for 1 year with a monthly capitalization. On July 1, the interest for the month of June will be added to the main deposit, and on August 1, interest will already be accrued on the amount of the deposit and the amount of interest for June, and so on.
I think it is obvious that the more often capitalization occurs, the more profitable it is. Accordingly, if the capitalization is monthly, then this quite significantly increases effective interest rate by deposit. And if you have capitalization once a quarter or once every six months, then this will practically not affect the interest rate on the deposit. And this is just an advertising move by the bank to confidently tell the future depositor that the deposit is with capitalization, in the hope that he will not specify the period of this very capitalization, but simply, having heard the right word, will open such a deposit without hesitation.
To estimate the difference in the expected income from two deposits with the same annual interest rate, but with a different interest accrual procedure, we will use the service fincalculator.ru. Let's say we opened 2 deposits in the amount of 500,000 rubles at 18% per annum, in one, interest is accrued at the end of the term, and in the other there is a monthly capitalization. We fill in the initial data in the financial calculator (read more about its capabilities in the article "") and get the following results at the end of the deposit period:
On a deposit without capitalization, after a year, we got the amount of 590,246.58 rubles;
On a deposit with monthly capitalization after the same period, we have a total amount of 597,589.76 rubles;
Feel the difference... In other words, the effective interest rate on the first deposit was 18%, but on the second, given that the amount on which these 18% per annum was accrued was constantly increasing, the effective interest rate was 18.75%.
Capitalization of interest on the deposit account
Profitability on bank deposits is estimated according to several parameters. Important role Here, of course, the interest rate comes into play. Many depositors only on the basis of it decide to invest their savings in a particular bank. However, there are types of deposits that even at a lower percentage bring more income. These include deposits with interest capitalization. The put forward rate becomes not the main indicator, but only the base value.
Due to capitalization of interest, the effective rate will exceed the declared value specified in deposit agreement nominal interest income, that is, it gives you the opportunity to passively increase your income. Capitalized deposits are one of the few forms of increasing savings using bank deposits for investors who prefer a passive way of earning profit. Let us consider in more detail what capitalization is, why is it needed, what types are there, what type is the most profitable?
What is capitalization?
It is an important characteristic of bank deposits and represents the addition of accrued interest to the main body of the deposit during its validity period. There may be several such periods in the main period. As a result, the accrued interest is added to the deposit amount and new interest will be accrued on the increased amount.
Thus, capitalization is an increase in the yield of deposits using the compound interest method, which allows you to increase the growth rate of the depositor's profit compared to calculating interest using a simple scheme, when income is accrued and paid at the end of the deposit term.
Why is capitalization necessary?
It allows you to get more income compared to types of deposits with a simple interest accrual at the end of the term. The effective rate allows you to evaluate the effect of capitalization. With its help, you can evaluate the offers of various banks.
Many investors always have a question: is it better to invest in a deposit at 10% per annum with interest accruing at the end of the deposit term, or to place it with a capitalization condition.
Let's do a simple calculation.
If you invest 100,000 rubles at 10% for 1 year, taking into account the payment of interest income at the end of the term, then the total amount to be received will be:
100,000+(100,000 * 10%)= 110,000 rubles
If we invest this amount under the same conditions, but taking into account the monthly capitalization, we get:
The effect of capitalization is obvious here. To get the same income, the rate on a deposit with interest accruing at the end of the term should be:
110 471/100 000 = 10,47%
Types of capitalization in banks VTB 24 and Sberbank.
The largest banks in the country offer deposits with the possibility of interest capitalization. However, the rates on them are lower than similar offers among other banks. VTB 24 and Sberbank offer placement of funds in deposits with capitalization and a choice of interest accrual period. The investor may, at his own discretion, choose several types of capitalization of his interest income. Calculate effective rate(based on the nominal 10%) in each case according to the formula:
- Monthly capitalization. It implies the accrual and addition of interest to the principal amount of the deposit at the end of each month. EU = 10.47%
- Quarterly. In this case, interest is calculated and added every three months. EU = 10.38%.
- Semi-annual. Interest is calculated every six months. EU=10.25%.
Thus, more frequent capitalization gives more high income, so you should pay attention to offers with monthly interest capitalization. 
Pitfalls that reduce the profitability of the deposit:
- Hidden fees for mobile bank, SMS notifications, fees for cash withdrawals from deposit account and so on. These conditions may not be specified in the deposit agreement, since they relate to settlement and cash services.
- The right of the bank to change the interest rate during the term of the deposit unilaterally by notifying the contributor. The catch is that a person may not receive such a notification.
Thus, deposits with long-term capitalization are much more profitable than deposits with accrual of income at the end of the term, even if the rate on them is lower. When choosing this type of deposit, you need to be prepared for the fact that you will no longer be able to use your interest. It is worth remembering that each case must be calculated separately. Calculate contribution from various types capitalization you can on our
Placing your savings on bank deposits(deposits), everyone strives to improve their financial position by increasing the return on deposits. Therefore, as a rule, preference is given to deposits with the highest interest rates. This tactic is not always successful, which will become clear when we calculate the deposit. When placing deposits, it is always desirable to take into account the capitalization of income. In order to calculate the deposit and determine the profitability of deposits, let's first consider what interest calculation options are used by banks. Consider the four most common options for calculating interest:
- accrual of interest at the end of the term on the deposit (the deposit is not prolonged, interest is not capitalized),
- accrual of interest at the end of the term on the deposit (capitalization of interest occurs when the term of the deposit is extended),
- quarterly interest accrual (and interest capitalization quarterly)
- monthly accrual of interest (and capitalization of interest monthly)
To understand what is the profitability of deposits and what is the difference between the calculation options, we will consider 4 options. The calculation of interest on the deposit for them was compiled by me according to one conditional example. The following parameters are taken as a conditional example for calculating the deposit:
- deposit amount - 300,000 rubles.
- deposit term – 12 months
- interest rate on the deposit - 10.75% "annual"
- indicative calculation period in examples - 2 years
| Monthly deposit amount: | Interest income | Deposit amount (2 year) | Interest income |
|
|---|---|---|---|---|
| 1 month | 300 000,00 | 300 000,00 | ||
| 300 000,00 | 300 000,00 | |
||
| 300 000,00 | 300 000,00 | |
||
| 300 000,00 | 300 000,00 | |
||
| 300 000,00 | 300 000,00 | |
||
| 300 000,00 | 300 000,00 | |
||
| 300 000,00 | 300 000,00 | |
||
| 300 000,00 | 300 000,00 | |
||
| 300 000,00 | 300 000,00 | |
||
| 300 000,00 | 300 000,00 | |
||
| 300 000,00 | 300 000,00 | |
||
| 12 month - 1 year | 300 000,00 | 300 000,00 | ||
| Annual total | 332 250,00 | 32 250,00 | 332 250,00 | 32 250,00 |
The annual yield of deposits amounted to 32,250 rubles. (300,000 rubles * 10.75% / 100% = 32,250 rubles). With the annual re-registration of the deposit, the income for two years will be 64,500 rubles. (32250 rubles * 2). By this example capitalization of the deposit is not provided, and there is no capitalization of interest, because. interest accrued for the first year is not directed to the deposit.
Option 2 - Interest is accrued at the end of the deposit term, capitalization of interest occurs after the prolongation of the deposit for the next term.
| Monthly deposit amount: | Deposit amount by months (1 year) | Interest income | Deposit amount (2 year) | Interest income |
|---|---|---|---|---|
| 1 month | 300 000,00 | 332 250,00 | ||
| 1 month | 300 000,00 | 332 250,00 | ||
| 1 month | 300 000,00 | 332 250,00 | ||
| 1 month | 300 000,00 | 332 250,00 | ||
| 1 month | 300 000,00 | 332 250,00 | ||
| 1 month | 300 000,00 | 332 250,00 | ||
| 1 month | 300 000,00 | 332 250,00 | ||
| 1 month | 300 000,00 | 332 250,00 | ||
| 1 month | 300 000,00 | 332 250,00 | ||
| 1 month | 300 000,00 | 332 250,00 | ||
| 1 month | 300 000,00 | 332 250,00 | ||
| 12 month - 1 year | 300 000,00 | 332 250,00 | ||
| Annual total | 332 250,00 | 32 250,00 | 367 966,92 | 35 716,92 |
At the time of the prolongation of the deposit for the second year, the amount of the deposit, taking into account the capitalization of interest, amounted to 332,250.00 rubles. The profitability of the deposit for two years amounted to 67,966.92 rubles. (32250.00+35,716.92), including the profitability of deposits only due to the capitalization of the deposit - 3,466.92 rubles. (35,716.92-32,250.00)
Option 3 - Interest is calculated quarterly with interest capitalization. Capitalization of the deposit is carried out quarterly.
| Monthly deposit amount: | Deposit amount by months (1 year) | Interest income | Deposit amount (2 year) | Interest income |
|---|---|---|---|---|
| 1 month | 300 000,00 | 333 573,54 | |
|
| 300 000,00 | 333 573,54 | |
||
| 300 000,00 | 8 062,50 | 333 573,54 | 8 964,78 |
|
| 308 062,50 | 342 538,32 | |
||
| 308 062,50 | 342 538,32 | |||
| 308 062,50 | 8 279,19 | 342 538,32 | 9 205,71 |
|
| 316 341,69 | 351 744,03 | |
||
| 316 341,69 | 351 744,03 | |||
| 316 341,69 | 8 501,67 | 351 744,03 | 9 453,12 |
|
| 324 843,36 | 361 197,15 | |||
| 324 843,36 | 361 197,15 | |||
| 12 month | 324 843,36 | 8 730,18 | 361 197,15 | 9 707,16 |
| Annual total | 333 573,54 | 33 573,54 | 370 904,31 | 37 330,77 |
With quarterly accrual of interest and prolongation of the term on the deposit for the second year, the amount of the deposit, taking into account the capitalization of interest, by the end of the second year amounted to 370,904.31 rubles, the profitability of the deposit was already 70,904.31 rubles, including from interest capitalization - 6404 .31 rub. (70904.31 - 64500.00).
Option 4
- Interest is accrued monthly with capitalization of interest. Capitalization of the deposit is carried out monthly.
| Monthly deposit amount: | Deposit amount by months (1 year) | Interest income | Deposit amount (2 year) | Interest income |
|---|---|---|---|---|
| 1 month | 300 000,00 | 2 687,50 | 333 887,42 | 2 991,07 |
| 302 687,50 | 2 711,58 | 336 878,49 | 3 017,87 |
|
| 305 399,08 | 2 735,87 | 339 896,36 | 3 044,90 |
|
| 308 134,95 | 2 760,38 | 342 941,26 | 3 072,18 |
|
| 310 895,33 | 2 785,10 | 346 013,44 | 3 099,70 |
|
| 313 680,43 | 2 810,05 | 349 113,14 | 3 127,47 |
|
| 316 490,48 | 2 835,23 | 352 240,61 | 3 155,49 |
|
| 319 325,71 | 2 860,63 | 355 396,10 | 3 183,76 |
|
| 322 186,34 | 2 886,25 | 358 579,86 | 3 212,28 |
|
| 325 072,59 | 2 912,11 | 361 792,14 | 3 241,05 |
|
| 327 984,70 | 2 938,20 | 365 033,19 | 3 270,09 |
|
| 12 month - 1 year | 330 922,90 | 2 964,52 | 368 303,28 | 3 299,38 |
| Annual total | 333 887,42 | 33 887,42 | 371 602,66 | 37 715,24 |
With monthly interest accrual and prolongation of the term on the deposit for the second year, the amount of the deposit, taking into account the capitalization of the deposit, by the end of the second year was 371,602.66 rubles. The return on deposits for two years is 71,601.00 rubles, including the return on deposits due to interest capitalization reached 7,102 rubles.
The above examples allow us to conclude that the profitability of deposits is the most significant with monthly accrual and capitalization of the same interest. Therefore, when choosing the type of deposit, it is necessary to pay attention to Special attention the frequency of interest accrual and the availability of capitalization.
In this article, I did not consider the issue of calculating interest on the amount of a demand deposit, since the interest rate on these deposits is usually minimal, and even long-term storage does not provide any tangible income for them.
Now let's look at an example of how sometimes choosing a deposit based on the principle of the highest interest rate on a deposit can reduce the profitability of deposits, if you do not take into account the presence or absence of interest capitalization and their frequency.
Conditional example parameters: Deposit in the amount of 300,000.00 rubles. The term of the deposit is 1 year. The investment period considered in the example is 2 years.
These 3 examples show that sometimes with a lower interest rate on a deposit, you can get more income. In addition, this calculation confirms that when choosing the best option for obtaining income from investing funds, it is always necessary to make an additional calculation of the deposit, specifying the frequency of interest accrual and the availability of capitalization of deposits and interest.
Concluding my analysis of the calculation of deposits and capitalization of deposits, I wish you good luck in choosing a bank for cooperation and choosing the best option for allocating capital. In order not to be mistaken, look at the interest rates in several banks.
