capitalization of the deposit - it is the interest on the amount that was invested initially, with their further accumulation and subsequent accrual of interest on the amount received.Sometimes this procedure is called compound interest.
Let us understand more on the issue of what is the capitalization.This method is applied for the banking institutions of various kinds of deposits, as well as for a range of credit products.As features capitalization increased benefit can be identified, emerging at the same time.Typically, the interest of this method calculated monthly or quarterly, but the periods can be different.These points should be taken into account when opening an account, that is, when making decisions about what you want to entrust their financial savings bank.The contract in this case there is the size of the interest rate, interest period and terms of capitalization as well.Interest is charged only for the number of days that the agent present in the bank account, and be sure to prescribed conditions of the payment of interim interest on the deposit by means of their identity as to the amount of funds already available in the account.
The fact that such a cap, you have already learned, and now we can say about the timing.Usually they are time periods in which the accrual of interest on the invested funds for savings, with additional interest reckoning.Banks set their own periods of capitalization, taking into account the adopted policy of conducting transactions with customer accounts.
important to note that there are different kinds of dates and periods of interest capitalization.First of all we are talking about one-time interest capitalization.In this case, the interest on the end of the investment period, in addition, provides for the extension of the deposit and additional interest charges.When it comes to the annual capitalization of interest, it is usually possible to speak about the contributions, calculated for two or more years.And the interest is calculated at the end of each period.Capitalization maybe even daily.
you already know what the capitalization of contributions, are now left to choose one or another form, drawing on the period of investment.It turns out that if a depositor exactly convinced that he did not need the money for a long time, it may choose a contribution to an annual cap.In the case where there is no such certainty, it is necessary to choose the contributions to the capitalization periods significantly shorter.
When asking what capitalization, all clear, let us distinguish the basic rules that are worth knowing if you are faced with bank deposits with similar characteristics.When studying the proposals of banks should pay attention to capitalization, as such deposits are more profitable at a lower interest rate than those with initially higher percentage.However, it is foolish to believe that compound interest is always more profitable.It may be that the deposit with the capitalization will produce less income - it all depends on the bank's policy and product offerings.Please note that the final deposit rate may be considerably higher if the capitalized interest will be paid at maturity and not by the client.Some proposals deposit rate may depend on the interest calculation and the method of payment.Many Russian and foreign banks have long offered deposits with the possibility of capitalization and therefore should not appear any problems with the choice of an appropriate organization.
Now you know what a cap and what benefits it gives.
