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What is a type of savings account that pays a higher interest rate because the financial institution invests the money money you deposit?
Wiki User
∙ 9y ago
There are numerous types of savings accounts that pay a higher interest rate, although this is not necessarily related to a financial institution investing your money; this is common for all banks and all accounts. Some higher yield savings options include money market accounts, fixed income investments, and CDs.
Wiki User
∙ 9y ago
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Does inflation rob you of your savings?
Yes and no. If your "savings" are not in a savings account, then technically yes. This is because your savings will slowly lose its purchasing power as inflation happens (emphasis on slowly, you will only "lose" 1-5% annually unless inflation spikes in a bad way). If your savings is in a savings account and is accruing interest, then no. This is because the interest will make up for the inflation.
What is the interest on a savings account?
The financial institution (bank or credit union) will publish their interest *rates*, and you can look for these rates in the branch, online, or if you giv call theiir customer service line. Really the question should be refined, because if you are talking about how much interest you are going to earn in a specific savings account given a fixed amount initial deposit, with interest compounding over time, then it depends on initial amount. There's a formula printed somewhere, I'm sure, but say you deposit $1000 and leave it, earn 1% interest. At the end of 1mo. you'd have $1010. Then at the end of the second month, you'd now earn 1% interest not on $1000, but on $1010, so your balance should then become something around $1020 by month 2. Interest rates being paid to savings accounts are incredibly low right now (in fact, aside from a few specialty banks, you'll be lucky to get 1%), but in years past, 5-6 or even 10% wasn't uncommon (though you'd have to go a while back for that!). But in general, that's how interest/compounded interest works. You'll probably want to rephrase your question because noone knows for sure what you mean, so we're making educated guesses, but that's pretty much it--it boils down to either 'ask the bank' or make the calculations when you know how much you have in the bank, whether you'll be using the cash or how much you can keep at the bare minimum in the acct each month, etc. If we wanted to put you on blast, we coulda said 'you ain't earnin' no interest cause you gotta leave some funds up in that savings account before they pay you any interest, instead of taking it out to buy (TVs, new cars, crack, other consumer items) and overdrawing yr account so you wind up paying *them* interest!
Why is a CD better then a savings account?
Because they earn a higher interest rate than savings accounts. The interest on CD's is atleast 2-3% higher than savings accounts. On the downside, the money in your CD is not as liquid as your savings account and your bank may charge you a penalty if you withdraw the money before maturity date.
If the Balance of payment always always balances then why you have deficit in the balance of payment What measure can be government take to address an in-balance in the Balance of payment?
when they are talking about the deficit or surplus they are usually only talking about the current account. The balance of payments will balance because the other accounts in it (Capital, financial and erros and ommissions) will account for the other parts eg if current account has defiecit of 100m the capital, financial and erros and ommisions will have a surplus of 100m
Significance of interest rates?
Interest rates are on opportunity cost of holding cash. Basically, if you have cash in your wallet you aren't earning interest in a bank account. Interest rates affect the cost of borrowing money (eg. credit cards, mortgages, personal loans) and affect the interest rate on your savings account. The nominal or base rate is set by the central bank in most countries. This basically gives an indicator to banks about what their interest rates should be set at, so at the moment in the US and UK interest rates are 1% or lower but that doesn't mean interest rates on new mortgages will be at this level because the banks charge extra to make a profit. Hope this helps!
When is interest levied on a current account?
Sorry. Not a 'one-size-fits-all kind of answer since each financial institution has its own adopted and published interest-crediting practices. You have to contact your financial institution to find out what your account's rules are.Answer:You do not earn interest on current accounts. Because of the high liquidity offered in current accounts banks do not offer interest on the balance maintained in those accounts.
Why do very few financial institutions offer interest checking accounts?
The primary reason interest checking accounts are hard to find is because of how they work. Interest checking accounts provide a mid to high interest rate on money in an account, along with the ability to write checks and transfer money. An interest checking account is a mix between an easily accessible account, which allows you to use checks and debit cards, and a high interest account, which usually doesn't allow the freedom to use checks.
Why are interest groups considered a type of linkage institution?
Because it does AND IT ISInterest groups are considered to be a type of linkage institution because they serve as a link between the government and the people
Define accrue and due?
In financial or banking term, there is a subtle difference between interest accrued and interest due. for example, if you open a saving account, the interest start accruing as soon as you put any amount of money in the account. However, there may be rules for this account, saying for example, that you will get the interest only if you leave the money at least 3 months in the account. If you need urgently the money and withdraw it from your saving account before the 3 month period has passed, then you will not get any interest on this money. The interest has accrued on your account, but it is not due, because you withdrew the money to early. Example: 3-month Saving account, 12% interest per year (1% per month): - 1st of January: open account and deposit $1000 - 1st January to 28th of February: interest accrues on the $1000 - 1st of March: withdraw $500: half of the interest accrued is lost - 1st of April: withdraw all the money from the account: - the remaining $500 + the interest due for 3 months on $500 (because this amount stayed at least 3 months in the account) I hope this helps, Excel-Hocam
Why You Cannot Find an IRA Rate?
If you are searching for a financial institution that offers a great rate on IRAs, you are not alone. Many people know that an IRA is an Individual Retirement Account. By hearing the word "account" in this, they compare it to a savings account or a money market account. These types of accounts have an advertised rate that will be applied to the funds deposited into the account. However, an IRA is not the same type of account as a savings account or a money market account. It will not earn a guaranteed IRA rate. Taking time to learn more about what an IRA actually is can help you to maximize the benefit you can enjoy from this type of account.What is an IRA?So why can't you find an IRA rate advertised on the Internet? The reason is because an IRA is more akin to a 401k account than a savings account or money market account. This is not an interest-bearing account at all. Instead, the funds you deposit into this account can be used to purchase mutual funds, stocks, bonds and even CDs. With some accounts, you can keep some of the funds you deposit in the financial institution's money market account, so there is a way to enjoy a guaranteed rate of return on your money. However, this return is often far lower than what you would enjoy if you invest in well-chosen stocks, funds and more.What to Look ForYou may be wondering how to find a great IRA if you cannot shop for an IRA rate online. The fact is that the financial institution you choose to open your account with is a critical factor in enjoying maximum benefits from your account. While you can use your IRA funds to purchase stocks, mutual funds and more, many financial institutions limit your purchasing options. For example, they may only offer you 15 or 20 different funds to select from. Another financial institution may also offer you an equivalent number of funds, or more or less in some cases, but they may offer entirely different funds. The funds with one financial institution may be more suitable for your needs and investment objectives. So take time to research the options available through different financial institutions before you decide who you should open your account with.
Can you save money with a high interest savings account?
Yes, a high interest account is a very desirable savings account because you will gain a decent amount of interest on your money. You will gain much more money if you get compound interest by saving more money into the account monthly.
Which are the requirements to obtain a Visa debit card in the UK?
In the United Kingdom, Visa branded debit cards have become very popular. They are issued through an individual's financial institution and are generally connected with a checking account. Because each bank may have its own requirements for issuing cards, looking at the programs offered from a specific financial institution will determine what a person needs to do to obtain one.
How much interest income needed to be reported on taxes?
If you made more than $10 in interest on a checking/savings/money market account or on a certificate of deposit (CD) the financial institution where the account is held is required to send you a 1099-INT showing the amount of interest the institution paid to you. If you received this form the interest you made would be listed in Box 1, and will need to be reported on your taxes to be in compliance with current IRS laws. If you did not receive this form, but believe this is an error, you need to contact the institution directly to get the amount and/or document. Just because you did not receive the form does not mean you do not have to enter it on your taxes. According to the IRS it is ultimately your responsibility to enter any and all information accurately. If you made less than $10 in interest it is unnecessary to report the interest income; also the institution would most likely not have sent you a 1099-INT because they are not obligated to do so when the amount is less than $10. One last piece of information; even if you feel you do not have much money invested it takes very little to go over the $10 amount. As an example: $500 held in account which yields 2% per year would put you over the reportable amount of $10. Source: My personal knowledge gained during 10+ year career in banking and finance.
What are the disadvantages of using checking accounts?
Many checking accounts do not offer interest on the money in your savings account. This is a disadvantage because the money you put in a savings account will collect interest, where a checking account will not.
How to Find an IRA Rate?
An IRA, or individual retirement account, provides you with a great way to save for retirement. There are several different types of IRAs that you can choose to invest in, such as a SIMPLE or Roth IRA. However, as you make your decision about which type of account to open up, you may also be trying to decide which financial institution to use for your new retirement account. One of the factors you may be trying to research and base your decision on is which financial institution offers the highest IRA rate available.The Best ReturnThe fact is that you largely will not be able to find an advertised IRA rate from any financial institution. An IRA is similar to a 401k retirement in that you deposit money into the account, then have flexibility with regards to how it will be invested. Most funds initially will be saved in a money market account that may offer you a nominal interest rate for your funds. However, most people who invest in an IRA will not keep most of their funds in a money market account. Instead, they will use these funds to purchase higher yield investments such as mutual funds, stocks and more. Because the investments inside each IRA may be different, you simply cannot find an advertised rate of return on an IRA. Instead, you have flexibility to control your own rate of return based on your own investment decisions.Why the Institution MattersAfter learning more about what an IRA actually is, you may think that where you invest your money does not really matter. If you have control over your investments inside your IRA, your financial institution may simple seem to be a vehicle. Any vehicle may offer you the same investment experience. This is not necessarily true, however. When you work with a specific financial institution, you will not have free reign to select any mutual fund you want to invest in. Instead, you will be offered only a handful of choices to choose from. Because different financial institutions will offer you different choices, you should carefully consider which institution you want to work with. This step alone can provide you with greater control over your ability to generate a better rate of return.
What is a kind of check guaranteed by a bank?
While personal checks and money orders are not guarranteed by banks, a cashiers check is. A cashiers check is written by a financial institution/bank on its own funds. The check is then signed by a representative of the financial institution/bank and made payable to a third-party. A cashier's check is secured, with the funds being guaranteed, because the amount of the check must first be deposited by the individual into the issuing institution's own account. The person or business to whom the check is made out will receive the funds no matter what.
Why can a bank afford to pay an interest rate on a savings account?
because the bank lends money out at a higher interest rate
