Have I understood the interest rate on a new account correctly?

Question

Ok, so a bank account is offering 8.19% gross rate on the first 2500, but only 0.1% on anything over. They calculate interest daily but pay it monthly.

If I put 2500 into the account, will I have an interest payment of 204.75 at the end of the month? Or, because interest would push it over 2500 after the first day would I have an interest patment of around 3?

My plan is to put the maximum I can in and then withdraw the interest payment every month. If it's calcuated daily then would I be better putting into the account 2310.50 so that the figures always stay below 2500?

My inclination is that I can put in 2500 as while interest is calcuated daily it's not being added to. So I should recieve the 204.75, and as long as thats withdrawn on the day that it's paid into the account I should recieve the same amount every month. Is that right?

Answer 1

wow- that's a very good question and a good idea.

I'm not 100% but I'm going to have to say that you might be right with your inclination. It makes sense to me BUT it also seems like it can't be that easy. Like there's some kind of catch. Cause I know the banks would have thought of that already and don't want to just give away money like that. But maybe they're depending on the fact that people won't go through the trouble to do it. I would simply call the bank and ask to be honest. But I think you might be right.

Answer 2

Is this a CD?

The rate offered by banks is a YEARLY rate, payable every month. So an investment of 2500 would give you interest income of 204.75 in a year, which would equal out to about 17.06 a month. this is a very good rate by the way.