High Interest Investment

How savings account interest works?

If I were to put $50,000 in a savings account that gives 2%. Would I be paid 2% of $50,000 every month or would the amount be divided and issued month to month?

Public Comments

1. The 2 percent is the *annual* interest rate. It would be calculated and paid at 0.16 percent every month. (If you actually have $50K, you'd be much better off putting it into a CD or at least a higher interest online savings account. You can do much better than only 2 percent -- at least 4 or 4.5.)
2. Typically, it is 2% for the year, but spread out month to month, and if you leave the interest there, it compounds and grows. So, the first month you would get 50,000 x 0.02/12 = $83.33, then the next month is it 50,083.33 x 0.02/12 = $83.47, etc.
3. Savings account's listed rate is an annual percentage rate, mot monthly interest rate. You get 2% a year but usually monthly interest compounded. For example, you deposit $50,000 on Jan. 1, your balance at Jan. 31 will be 50,083.33. At the end of Feb., the 2% per annum is applied on $50,083.33, thus your balance at Feb 28 will be $50,166.80, and so on provided that there is no withdrawal during the year. If the savings account rate is stated clearly as "simple interest rate," it's a straight 2% per year without monthly compounding interest calculation. You will receive 51,000 at the end of the 12 months provided no withdrawal during the year.
4. Please call charles schwab and open an account. Their 1 year cd's pay almost 4% and there are no tricks (like bank cd's). Bank cd's are tricky. If you fail to write a letter when your cd expires, it will reinvest at a super low interest rate. If you sell your cd without that letter you will lose 6 months interest. Stay away from banks when investing. Please. .