please ACTUALLY explain this like im 5 i genuinely cannot grasp this concept whatsoever. i’m opening a savings account and it says;
“The interest rate depends on your account balance. All rates are variable. 4.25% p.a. on balances less than $50,000. 4.25% p.a. on balances between $50,000 – $249,999.”
am i paying for my own savings account???? what??????? i am so confused i feel like im going crazy
In: 0
You have 100 cookies. I (the bank) tell you I will keep your cookies safe, so you give them to me and can take them back any time you want. Every three months I will add 1 cookie to your cookie fund, as 1% interest compounded quarterly. Compounding just means basing the interest rate from the original amount plus the amount of the previous interest. So the next month it will be 1.01 cookies added to your cookie fund.
The purpose of interest is to encourage more people to put money in the bank, as banks then loan out that money and get more in return, allowing them to make a profit. Hope this helps.
Latest Answers