Reviewing the range of deposit products offered by banks, often the phrase "capitalization of the deposit."What is it, and what benefits it promises depositors need to know everyone who is going to enter into a contribution agreement with the bank.
procedure of allocating the interest income can be based on simple or complex formula.Simple interest is calculated by multiplying the amount of the contribution of the revenue rate.Dividing this number by 100, you can determine the income that results from the simple deposit.
Compound interest is calculated differently.Accrued interest for a specific period plus the contribution to the basic and further accumulation occurs on the basis of the increased amount of the deposit.Thus, brick by brick invested money "grow up."This process is interest on the "plus interest" and has a capitalization of contributions.What it can bring the investor - is fairly obvious.The growth of money compared with the simple deposit can be very significant, depending on the method and frequency of capitalization.
If accrual will take place at the same time, at the end of the deposit agreement, then it will be less profitable for the investor than the monthly interest income.Using the online calculator deposits with capitalization, which is built into the service virtually any bank, you can see the pattern: the smaller the interest period, the higher the final result.The best option may be to consider the capitalization of interest once a month.
analyzing the conditions and parameters of different deposits, can be found the following pattern: deposits with capitalization due to have a lower rate of return.Credit institutions often go on a little trick - they are willing to explain how beneficial capitalization of contributions.What is associated with a decrease in interest rates by 0.5-1 percentage points, they are silent.
Another aspect may be important for the investor.The most favorable combination of conditions and parameters of the deposit - a deposit with capitalization and refill.It is absolutely clear dependence: having the ability to increase the amount of investment, the investor thus increases the amount owed.So, it can be assured of a high level of income on such a deposit.Not least, of course, plays and term facilities money in the bank at interest.
thus considered the question of how profitable capitalization of contributions, it would bring a clear profit should nonetheless attentive to the choice of the type of deposit.The best option for the investor to be accurate calculation of the dividend payable, which will be able to make a bank employee at a personal visit to the customer's credit institution.Then, based on the specific numbers can make the final choice.A careful study of all the terms of the contract, accuracy and punctuality in the calculation of interest - a guarantee that the investor will profit.
