How Is Interest Calcualted on Rams & ANZ Accounts?

Lbaskinghobo on 05/02/2018 - 15:38
Last edited 05/02/2018 - 17:09 by 1 other user

Hello all, I've been trying to maximize my interest earnings lately and opened up a Rams savings account which has a bonus 1.45% p.a. interest rate on top of the 1.35% p.a = 2.80% p.a.

I still have a ANZ Access Advantage account, because from what I could find, Rams does not offer a debit card. ANZ has a bonus 2.05% p.a. interest rate on top of the 0.50% p.a. = 2.55% p.a. So lately I put $2001 in my Rams saver, which if I am correct, the interest is calculated on the last balance of the month.

I did not withdraw money or anything yet I only earned $2.46 from the interest. Shouldn't it be 2001 x 0.003 / 12 = $5~? And what's stranger is my ANZ account earned $3.33 from $816 in my balance, when I shouldn't be earning the bonus interest anymore because I have had an ANZ account for much longer than 3 months now.

Can anyone explain to me the maths behind how the interest is calculated?

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  Fergy1987 on 05/02/2018 - 15:47

  +3

  Interest is calculated daily I believe - Paid monthly. So if you didn't have the account for the full month you miss out.

  Is there a minimum balance…..maybe you need $5000 to earn the full interest.

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  pantsparty on 05/02/2018 - 15:50

  +3

  Why would interest be payable based solely on your closing balance for the month? That means I could deposit money in on the last day of the month, get paid the interest and withdraw the money again the next day. Why would the bank pay interest on that? Did you read their terms and conditions? It is much more likely calculated on your average balance for the month.

  Did you google and try to work out the answer to this yourself? This feels like a lazy crap post.

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  cypher67 on 05/02/2018 - 15:51

  Was the money untouched for the full month? Or did you move the money from ANZ to RAM half way through? Also do you have your TFN registered at either?

  • 

    baskinghobo on 05/02/2018 - 21:09

    Thank you. I think i only put the money half way through the month so it all makes sense to me now but i am still having trouble understanding why ANZ is still giving me bonus interest as written on my statement when i have had a online savings account for a lot longer than 3 months.

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  GG57 on 05/02/2018 - 15:56

  Terms and Conditions (for both banks) will clarify how interest is calculated.
  It could be on the daily balance, it could be on the lowest monthly balance, etc.
  As mentioned by cypher67, if you haven't provided your TFN, Withholding Tax could be deducted from that interest calculation.

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  JimmyF on 05/02/2018 - 15:59

  +2

  So lately i put $2001 in my rams saver which if i am correct, the interest is calculated on the last balance of the month

  Interest is calculated daily not on the balance at the end of the month, so was $2001 in for the ENTIRE month, and did you add at least $200 to enable the bonus interest?

  So $2001 @ 2.80% is $4.67 a month or 15.35 cents a day.

  So based on this, your $2001 was only in there for about 16 days.

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  Seraphin7 on 05/02/2018 - 16:33

  +4

  I'd be surprised if your interest is calculated on your balance on the last day of the month. With this, I'd have nothing in there all month, drop all my cash in there for the last day of month, bank the interest, move all my cash back somewhere else and repeat every month … bonanza!

  Pretty much every bank account these days calculates your interest daily (i.e. on whatever your actual closing balance is that day) and then pay it at the end of the month.

  For simplicity, let's assume your balance is $2,001 every day. At 2.80% p.a. interest, you are earning 2001 * 0.028 / 365 = $0.153501 per day. If that's there for 31 days, you'll get paid $4.76 at the end of the month.

  If your balance is there for less than 31 days, you get paid proportionately less.

  Equivalently, as your balance moves up and down through the month, the daily interest fluctuates proportionately and you get paid the sum of these daily accruals at the end of the month.