Banks savings interest computation

[devion]

I was wondering how does normal savings account bank interest gets computed? Most of them are using daily average balance to compute & the cut off times are typically at 2359hrs of the day. Question is that as long as the funds arrived before 2359hrs for that day, then the amount will be counted into the day average balance right?
There is also a cutoff during weekends & public holidays this can differ between banks. EG, If it is a Sunday, the amount u credit into the account will not be computed to earn interest.
My other question is withdrawing money out during the day, does not matter whether it is done early or later right? As long as the amount is withdrawn, regardless of when during the day, it will not earn any interest for that day balance.
I believed some might have think to delay transfers...etc till later part of the day in order to not lose too much interest from that amount.

 

[reddevil0728]

I was wondering how does normal savings account bank interest gets computed? Most of them are using daily average balance to compute & the cut off times are typically at 2359hrs of the day. Question is that as long as the funds arrived before 2359hrs for that day, then the amount will be counted into the day average balance right?
There is also a cutoff during weekends & public holidays this can differ between banks. EG, If it is a Sunday, the amount u credit into the account will not be computed to earn interest.
My other question is withdrawing money out during the day, does not matter whether it is done early or later right? As long as the amount is withdrawn, regardless of when during the day, it will not earn any interest for that day balance.
I believed some might have think to delay transfers...etc till later part of the day in order to not lose too much interest from that amount.

Can paragraph a bit?

difficult to read when in chunks

 

[maumu]

different banks got different cut-off times for different days for daily transactions... and using different formulations based on different policies.

not everything is by 2359h.

you might want to dig more by using the Search function in this sub-forum.

 

[BBQ99]

I am not 100% sure but this is what i understand.
Most Bank is the Avg amount of $$ in the month I can tell you the big 3 bank in SG does this.. Only smaller banks that indicate interest is calculated daily do daily interest calculation.
and Normally it is end of the Biz day.
For the Avg amount. an example is say for a 30 day mth. 14 days u have 10K . on the 14th day u put in another 10K and no other deposit or withdrawal is made.
That month avg is 15 days with 10K. 15 days with 20k (the day u put in not counted, but the time of day u take out will then make a different). So Avg is 15K for the mth.

So the time of day you put in it does not matter on the interest as it is not counted for the day.

 

[henrylbh]

I assume that interest is calculated daily based on the balance on the date indicated in the statement. Otherwise, how are we to verify the interest credited at the end of each month.

 

[BBQ99]

I assume that interest is calculated daily based on the balance on the date indicated in the statement. Otherwise, how are we to verify the interest credited at the end of each month.

I am not 100% sure but it is my understanding base on the saving account I have with the banks. Of course there is bank that do calculate interest daily. An example will be the Trust Bank where they show daily interest accumulated for the mth.

They just calculate the average balance each mth for the interest as it will be less work. The result is the same. If they calculate the interest daily, in situation where u do not meet the bonus interest requirement like CC spending, Salary, Investment etc. It will complicate the interest calculation if they calculate interest daily.

Example if you put a large sum into the account for 2 days and take out. It will affect the average balance for the month. They then will calculate at the end of the month the interest based on the average balance and pay out the interest.

A situation like if you close the account in the middle of the mth and they prorate the interest when you close the account you will see the account give way below the interest expected (much less than the 50% interest u should get for the month). This is because they will then calculate the interest under the terms where u did not meet the interest requirement for the month.

That is why people would advice closing the acct at the start of the month after u transfer out all the $$ before closing. ( if possible)

Some of the bank monthly statement actually give the average balance. And example would be OCBC 360 as it is also important information for one of the interest component requirement for the "Growth" part.

 

[henrylbh]

I am not 100% sure but it is my understanding base on the saving account I have with the banks. Of course there is bank that do calculate interest daily. An example will be the Trust Bank where they show daily interest accumulated for the mth.

They just calculate the average balance each mth for the interest as it will be less work. The result is the same. If they calculate the interest daily, in situation where u do not meet the bonus interest requirement like CC spending, Salary, Investment etc. It will complicate the interest calculation if they calculate interest daily.

Example if you put a large sum into the account for 2 days and take out. It will affect the average balance for the month. They then will calculate at the end of the month the interest based on the average balance and pay out the interest.

A situation like if you close the account in the middle of the mth and they prorate the interest when you close the account you will see the account give way below the interest expected (much less than the 50% interest u should get for the month). This is because they will then calculate the interest under the terms where u did not meet the interest requirement for the month.

That is why people would advice closing the acct at the start of the month after u transfer out all the $$ before closing. ( if possible)

Some of the bank monthly statement actually give the average balance. And example would be OCBC 360 as it is also important information for one of the interest component requirement for the "Growth" part.

If you have 0 balance from beginning of a 30 days' month and you deposit $100,000 on 30th, the interest will be calculated on $100,000 for that day and never on average balance for the month.

 

[Trazora]

If you have 0 balance from beginning of a 30 days' month and you deposit $100,000 on 30th, the interest will be calculated on $100,000 for that day and never on average balance for the month.

uh no lah

 

[devion]

My question on the daily balance is whether the money is placed into the account at 700hrs or at 2300hrs, does it matter on that day daily balance to compute the interest? I also wonder whether banks will also impose similar practice like our CPF board where money moved in or out in a month, that amount will not be counted into the monthly balance for interest, whether banks would do this but on a daily basis.

 

[ahnyaahnya]

I was wondering how does normal savings account bank interest gets computed? Most of them are using daily average balance to compute & the cut off times are typically at 2359hrs of the day. Question is that as long as the funds arrived before 2359hrs for that day, then the amount will be counted into the day average balance right?
There is also a cutoff during weekends & public holidays this can differ between banks. EG, If it is a Sunday, the amount u credit into the account will not be computed to earn interest.
My other question is withdrawing money out during the day, does not matter whether it is done early or later right? As long as the amount is withdrawn, regardless of when during the day, it will not earn any interest for that day balance.
I believed some might have think to delay transfers...etc till later part of the day in order to not lose too much interest from that amount.

Please lah. Savings account interest rate so low. Don't give yourself headache over 1 day's interest