Question about a savings account

Question

What does variable-rate interest compounded daily and paid quarterly mean?

Answer 1

It means that your interest is calculated on the balance and corresponding interest rate each day, taking into account the effect of adding each day's earnings to the balance.  Since the interest rate is variable, your interest rate can go up or down.  

For example, if you earned 14 cents on your $1,000 balance earning 5 percent annual yield yesterday, today's calculation would be based on a balance of $1,000.14.  Let's say the interest rate changed to 4 percent.  On the second day you would earn 11 cents on your $1,000.14 balance at 4 percent annual yield.  The next day, your interest rate could change again, but you would earn interest on a balance of $1,000.25.

However, the interest is not paid until the end of each quarter, typically March 31, June 30, September 30, and December 31.

Answer 2

The rate of interest on your account changes daily.  Each day they calculate the amount of int rest to be paid to your account.  They add or enter the total amount accumulated at the end of the quarter when they balance the books.  This is 4 times a year.