Compound interest is the interest accrued on the original principal amount, which also includes all accrued interest from previous periods on the deposit or loan.
Compound interest is calculated by multiplying the original principal amount by one plus the annual interest rate increased to the number of compound periods minus one.
Interest can be calculated on any given frequency schedule, from continuous to daily or yearly.
When calculating compound interest, the number of interest periods is of great importance.
The younger you are, the more you will earn from compound interest throughout your life. Essentially, you are increasing your money.
The 3-6-3 rule is a slang term for an informal practice in banking, especially in the 1950s, 1960s and 1970s, that was the result of the industry’s uncompetitive and simplistic conditions.
The account balance represents the available funds or present value of an account of a particular financial account, such as a checking, savings or investment account.
The annual equivalent rate (AER) is the actual interest rate on investments, loans or savings accounts that can be obtained after compounding interest.
The bank reconciliation report summarizes the banking and commercial activities by reconciling the organization’s bank account with its financial statements.
A bank run occurs when large groups of depositors withdraw their money from banks at the same time, out of fear that the institution will become insolvent.