How do banks calculate interest on savings accounts? The account balance varies all the time, so what amount is the interest calculated on?

Question

How do banks calculate interest on savings accounts? The account balance varies all the time, so what amount is the interest calculated on?

In: Economics

Answer 1

I’m not going to say it’s like this on every bank out there, but a common way to do it is calculate interest on daily balances, but pay it out monthly.