Interest calculation in Advanced Budgets
Interest Calculation in Advanced Budgets
Overdraft Interest
When money is withdrawn from a bank account and the available balance goes below zero, the account is said to be " overdrawn ". If there is a prior agreement with the account provider (bank or other financial institution) for an overdraft, then interest is normally charged at the agreed rate. Once the overdraft is paid, the interest stops accruing
How is Overdraft Interest calculated in Advanced Budgets
In the example above there is a positive bank balance for the months of Jul 2009 and Aug 2009. No overdraft interest can be calculated
Sep 2009 balance is -$74,111
Overdraft Interest Rate is 10%
10% of -74,111 = 7,411.10
7411.10 divided by 12 (months) = 617.59
$618 is the interest calculated for the month of September 2009. This amount is incurred in the following month, October 2009
Overdraft Interest Rate is 10%
10% of -74,111 = 7,411.10
7411.10 divided by 12 (months) = 617.59
$618 is the interest calculated for the month of September 2009. This amount is incurred in the following month, October 2009
Oct 2009 balance us -$65,182
Overdraft Interest Rate is 10%
10% of 65,182 = 6,518.20
6,518.20 divided by 12 (months) = 543.18
$543 is the interest calculated for the month of October 2009. This amount is incurred in the following month, November 2009
$543 is the interest calculated for the month of October 2009. This amount is incurred in the following month, November 2009
Credit Interest
Is interest earned from a financial institution accounts and term deposits. This is interest credited (added) to your account.
Credit interest is only paid when you have a positive bank balance ie. money in the bank
Is interest earned from a financial institution accounts and term deposits. This is interest credited (added) to your account.
Credit interest is only paid when you have a positive bank balance ie. money in the bank
How is Credit Interest calculated in Advanced Budgets
In the example above:
The Opening Balance is $206,900
Credit Interest rate is 10%
10% of 206,900 = 20,900
20,900 divided by 12 (months) = 1,724.17
$1,724 is the interest calculated to be included (added) in Jul 2009 transactions
10% of 206,900 = 20,900
20,900 divided by 12 (months) = 1,724.17
$1,724 is the interest calculated to be included (added) in Jul 2009 transactions
Jul 2009 balance is $21,054
Credit Interest Rate is 10%
10% of 21,054 = 2,105.40
2,105.40 divided by 12 (months) = 175.45
$175 is the interest calculated for the month of July 2009 to be included (added) in Aug 2009 transactions
Credit Interest Rate is 10%
10% of 21,054 = 2,105.40
2,105.40 divided by 12 (months) = 175.45
$175 is the interest calculated for the month of July 2009 to be included (added) in Aug 2009 transactions
Similarly,
Aug 2009 balance is $33,456
Credit Interest Rate is 10%
10% of 33,456 = 3,345.60
3,345.60 divided by 12 (months) = 278.80
$279 is the interest calculated for the month of October 2009, to be included (added) in September 2009 transactions
The following month, Sep 2009 the bank account is in overdraft i.e. a negative bank balance, therefore no credit interest is calculated
Aug 2009 balance is $33,456
Credit Interest Rate is 10%
10% of 33,456 = 3,345.60
3,345.60 divided by 12 (months) = 278.80
$279 is the interest calculated for the month of October 2009, to be included (added) in September 2009 transactions
The following month, Sep 2009 the bank account is in overdraft i.e. a negative bank balance, therefore no credit interest is calculated
Article ID CBP606