Woori Bank’s Time Deposit Interest Computation

non-fee-credit-card-rates

Some people asked me why the amount stated in their passbook does not equal to the 7.5% interest as promised by the bank. Let’s take Woori Bank’s 7.5% interest rate for example. In fixed savings account, the total amount that you can get after the term (1 year) is stated in the passbook. It’s 3,746,250 won. Now you wonder why the interest earned isn’t 270,000 won (7.5 % of 3,600,000 won total deposit). Let me show you how it is computed.

  • Monthly deposit: 300,000 won
  • Term: 12 months
  • Interest rate: 7.5%
  1. 1st month  :   300,000 won  x 0.075  x   12/12 = 22,500 won
  2. 2nd month:   300,000 won  x 0.075  x   11/12 = 20,625 won
  3. 3rd month :   300,000 won  x 0.075  x  10/12 = 18,750 won
  4. 4th month:    300,000 won  x 0.075  x    9/12 = 16,875  won
  5. 5th month:    300,000 won  x 0.075  x    8/12 = 15,000 won
  6. 6th month:    300,000 won  x 0.075  x    7/12 = 13,125 won
  7. 7th month:    300,000 won  x 0.075  x    6/12 = 11,250 won
  8. 8th month:    300,000 won  x 0.075  x    5/12 =  9,375 won
  9. 9th month:    300,000 won  x 0.075  x    4/12 =  7,500 won
  10. 10th month:  300,000 won  x 0.075  x    3/12 =  5,625 won
  11. 11th month:   300,000 won  x 0.075  x    2/12 =  3,750 won
  12. 12th month:   300,000 won  x 0.075  x    1/12 =  1,875 won
Interest= 146,250 won
Total deposit= 3,600,000 won
Total Amount: 3,746,250 won
2014-02-03-12-34-24_deco
If you have free savings account, you can compute the interest you can earn simply by changing the amount of deposit every month. Some people usually think that when they are quoted an interest rate (7.5% in this case), they will get that interest no matter how long the holding period is. That is wrong. That quoted rate is an annual rate and you can only earn it if you let the bank keep your money for the whole term (1 year).🙂
Have a great day!🙂
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