modern banking system is composed of many banks.Banks own funds in addition to working as the funds raised, ie by contributions.Free funds can be attracted both individuals and legal entities, but the involvement and interest rates offered are directly dependent on means-tested bank in extra cash.Types of deposits are many, but the most beneficial for the client is considered to be investment in which there is capitalization of interest on the deposit.Choosing the right type of deposit, you need to clearly understand what the capitalization of the deposit and capitalization of interest on the deposit.The capitalization of the deposit - this is an increase in the amount of its accrued interest.Usually when you make a contribution is a separate deposit account, which is taken into account and, the sum.Depending on the conditions of the deposit interest may be charged at the end of the term, monthly, quarterly or even once a year.With capitalization of contributions accrued interest will be added to the deposit amount, which is at the end of its life will be credited to the current account of the depositor.Interest in the capitalization of the deposit are calculated each time based on the initial amount deposited, so do not increase with time.In the case of placement of funds with such an opportunity as the capitalization of interest accrued on the deposit interest is not simply added to the deposit amount, and participate in the next calculation.So every time you calculating the amount of deposit plus any accrued interest.As a result, interest is charged on interest, which greatly increases the effective rate on the deposit.Capitalization of interest on the deposit it is thanks to this feature, and advertised by all banks, which have a similar type of deposit.
advantage deposit with interest capitalization - a higher level of income compared with deposits with periodic interest payments.Such profitable placement of free funds selected customers who are unwilling or unable to take the accrued interest monthly.
Annual interest rates on deposits with interest capitalization is generally lower than on deposits with interest payable at maturity, but higher than on deposits with periodic payments of.The reason for this - in the bank's confidence that the money will be made at its disposal is specified in the contract amount of time.
terms of deposits with interest capitalization vary depending on the bank, but is usually 1 year.Accomodation deposit for a shorter period is impractical because the capitalization of interest would be insignificant and virtually undetectable.The only exception - the contributions of a very large sum.
Normally capitalization of interest due to the Bank used the software takes place automatically, so check the correctness of calculation makes no sense.But if you want you can do it, it should only take into account that the interest calculation takes place with the day following the day of deposit.If desired, you can even make its own capitalization.To do this, place deposits with replenishment and the periodic interest payments.Accrued and paid the amount of interest the customer can make their own as the completion of the contribution, which will result in almost the same capitalization of interest.
addition to the capitalization of the deposit and interest, there is also such a thing as a thin capitalization.The sphere of the contributions it has no relation, touching more capital firms and companies.Thin or insufficient capitalization means that the company operates in largely at their own expense and at the expense of borrowed or leveraged.
