How to Calculate Interest on Savings

This article will show you a mathematical formula to determine how to convert interest percentages into dollar amounts, and dollar amounts into interest. It's important to know how your money is growing. It is more important to validate that your money is actually growing at the rate your were promised.

Things You'll Need

• calculator

Instructions

1. Find out what your APY (annual percentage rate) actually is, and if it has any adjust-ability.

2. Write down the rate you are saving money at.

3. Log on to your on line banking site, or retrieve your end of the year bank statement from your files or your banker can print yourself a copy.

4. Take the dollar amount you saved over a one year cycle and multiply it by your promised APY.Example: you saved $2000 last year and your rate is 1 percent. $2000 x .01 = $20

5. Converting interest into dollars is just as easy, simply do the process backwards.example: 6.5 percent x $2000 equals $130

Tips & Warnings

• Numbers don't lie if there is a discrepancy cross check the numbers with your banker.

• For a higher APY consider opening an online savings account.

• Beware of adjustable APY's it is hard to track your interest earnings.