Term deposit interest amount calculation formula and representative example Plan your future and save with confidence

Daily interest calculation is done with the following formula:

Principal amount is the total deposit balance of the given day. Principal amount can contain initial deposit amount, capitalized interest amount (for cumulative deposits), cumulative deposit periodic instalments amount (for cumulative deposits).

Interest rate
is the annual nominal interest rate defined for the specific deposit type and period.

Standard Term Deposit

Representative example:

  • Initial deposit amount - AMD 1,000,000
  • Deposit term - 6 months (183 days)
  • Annual nominal interest rate - 5%
  • Number of days in the reporting year - 365
  • Start date - 01/06/2018
  • Maturity date - 03/12/2018

 

Calculation of paid interest for standard term deposit:


Interest at maturity1 = 1,000,000 x 5% x 183 x (1/365) = AMD 25,068.49

Income tax 10% from interest amount = 25,068.49 x 10% = AMD 2,506.85

Net Interest amount = 25,068.49 - 2,506.85 = 22,561.64

Deposit amount at maturity = Initial deposit amount + Net Interest amount = AMD 1,022,562

Annual percentage yield, where interest amount is paid at the end of the period will comprise to 5.06%.

Term deposit with interim interest repayment

Representative example:

  • Initial deposit amount - AMD 1,000,000
  • Deposit term - 6 months (183 days)
  • Annual nominal interest rate - 5%
  • Number of days in the reporting year - 365
  • Start date - 01/06/2018
  • Maturity date - 03/12/2018

Calculation of paid interest for standard term deposit with interim interest repayment:


Accrued Monthly Interest (30 days) = 1,000,000 x 5% x 30 x (1/365) = AMD 4,109.59

Income tax 10% from interest amount  = 4,109.59 x 10% = AMD 410.96

Accrued Monthly Interest (31 days) = 1,000,000 x 5% x 31 x (1/365) = AMD 4,246.58 

Income tax 10% from interest amount  = 4,246.58 x 10% = AMD 424.66

Net Interest amount paid monthly = 4,109.59 - 410.96 = AMD3,698.63 or = 4,246.58 - 424.66 = AMD 3,821.92

Net Interest amount paid during the whole period of the deposit  = 3,698.63*3 + 3,821.92*3 = AMD 22,561.64

Annual percentage yield, where interest amount is paid monthly will comprise to 5.12%.

1Interest is calculated from start date of the deposit up until the date of maturity (interest is not calculated on the actual day of maturity).

Last updated on: 23/8/2019 09:51:54