Page Comparison

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1. The daily balance method; and
2. The average daily balance method.

The examples below use end-of-day-balances and refer to the interest posting & compounding periodperiods used.The interest compounding period

Terms

Compounding Period: is the span of time which at the end of which savings in a client’s account earn interest. Interest periods may vary; they may be daily, weekly, bi-weekly, monthly, quarterly, semi-annual or annual.Examples of each method are provided using account activity for one month and the interest is calculated at the end of the day, end of the month - 31st Mar 2013the interest earned over this period on the savings account balance in accumulated with the balance of the account is applicable for interest calculations in future periods. As a result the interest is compounded. The following compounding period frequencies are supported:

• Daily: compounding occurs on the balance each day and is accumulated with the balance so that the next days interest calculation takes it into account.
• Monthly: compounding occurs on the interest earned over the entire month. Next months interest calculation is on the savings account blance + any interest earned in previous compounding period.

Posting Period: is the span of time which at the end of the interest earned over this period on savings account is credited or posted to the clients account. A posting period may include many compounding periods. The following posting period frequencies are supported:

• Monthly: The period mirrors the calendar month so periods are 01 Jan - 31 Jan, 01 Feb - 28 Feb, 01 Mar - 31 Mar etc
• Quarterly: The period mirrors the calendar quarter so periods are 01 Jan - 31 Mar, 01 Apr - 30 Jun etc
• Annually: Ther period mirrors the calendar year so perdios are 01 Jan - 31 Dec for each year.

Nominal annual interest rate %: Also known as nominal APR, its nominal as this rate doesnt reflect influences such as inflation or compounding. The percentage is represented as a number e.g. 20 for 20% NOT as a fraction 0.2 = 20%

Interest Calculation Method: We support Daily Balance and Average Daily Balance

Days in Year: Some people want their interest calculations to be done over a 360 day year instead of 365/366 day year.

Account Activity

The client makes the following transactions throughout the month on an account opened on 01 March 2013:

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