Advantages of Fin-Plus.ru Deposit Calculator
Calculator of the Deposits with Interest Capitalization
Every bank deposit agreement stipulates one of two possible ways to calculate accrued interest - with capitalization or without it. If capitalization is the case, then the regularly accrued interest is added to the amount of the deposit, so that each subsequent interest accrual will already occur for a larger amount (the so-called compound interest). When deposit does not foresee interest capitalization, the entire accrued interest is transferred to a separate bank account and does not influence further subsequent accruals of interest. If the interest rate and other equal conditions of both types of deposits are the same, those with interest capitalization are more preferable, since they bring a greater income to the depositor. Moreover, the more frequently capitalization occurs, the higher the final income is. To choose the desired type, select or deselect the option "With capitalization" in the line "Interest accrual frequency"
Calculator of the Deposits with Possibility of a Top-up and Partial Premature Withdrawals
If your deposit agreement allows possibility of replenishment and you used this option during the deposit term, then in the calculator column "Deposit replenishment" you need to add as many lines as how often the replenishments were made by you. In each line, you need to specify the amount and date of every replenishment. Similarly, in the "Partial withdrawals" column you indicate the withdrawals which you’ve made. In case of partial withdrawals from the deposit which does not allow interest capitalization (and so interest is accumulated on a separate account, for example, a current account), it is necessary to indicate which account was used for the funds withdrawal. If the deposit agreement requires a certain minimum balance and if it is specified in the calculator, an additional review will be made to check that the next withdrawal will not lead to an excessive reduction of the account balance.
Adjustable and Fixed Interest Rates
If the deposit agreement states that interest is calculated at a fixed rate during the whole term or if there is no mentioning about the changes in the rate conditions, then in the calculator field "Interest rate" indicate that the rate is fixed and enter its value. This type of rates is the most common (they make more than 95% of all deposits calculated for Fin-Plus.ru). In case when the interest rate is adjustable depending on the deposited amount, several lines must be entered in the calculator -- each line will define the lowest limit (the minimum amount) starting from which the entered rate takes place. The upper threshold (the maximum amount at which the entered rate is still valid) is automatically identified by the next lowest limit defined in the following line in the increasing order, in other words by the next line with the entered lowest limit amount. The other possible option offered by a number of banks allows changes in the interest rate depending on the period during which your money are used by the bank. In this case, firstly, select the applicable type of rate, and secondly, add several lines, one for each rate value. Each line determines the time interval for the interest action. The final day (the later date) for the ending of such interval should be entered explicitly. The beginning of the interval (earlier date) is automatically used by the calculator -- it uses either the date when the deposit was made or the date following the day indicated as the end date of the previous interval. For example, if a deposit agreement is signed for 1-year period, and it says that 10% rate applies starting from the 1st till the 100th day of the deposit, and the rate of 12% applies starting from the 101st day till the end of the agreement term, you should enter 2 lines into the calculator with the following data: 1) Number of days = 100, Rate = 10%. 2) Number of days = 366, Rate = 12%.
The Tax Code of the Russian Federation stipulates that when the interest rate for the individual's deposit exceeds a certain threshold (9% for foreign currency deposits, that is refinancing rate of the Central Bank of the Russian Federation, + 5% for deposits in russian rubles), then the excess amount above this limit is to be taxed (30% or 35%) in favor of the state. In such cases the bank acts as a tax agent, i.e. it transfers money to the State Treasury regardless of the will of the depositor (investor). This leads to a reduction in the amount that the depositor can receive at the end of the deposit term. The procedure for withholding the tax is discussed in more details in a separate article. In order to correctly identify the value of the tax rate in the calculator, it is important to check the "Place of residence" box correctly. If you spend less than half a year in Russia, then you can claim a reduced tax rate of 30%, in which case you need to leave the box unchecked. But be prepared to that the bank will ask you for the supporting documents.
If your bank deposit agreement allows automatic prolongation of the agreement on the same terms which were in effect on the deposit day, then in the field "Deposit prolongation" indicate how many times you’ve taken advantage of this opportunity. If the conditions of the deposit (for example, the interest rate) change each time the prolongation takes place, then in order to view the results the initial and prolonged deposits should be calculated sequentially, each time entering a new amount and the date of the deposit (you can take them from the results of the previous calculation) as well as the deposit interest rate (you can see it in the agreement or on the bank's website).
Methods of Interest Calculation
The deposit calculator supports all methods used by banks to calculate the interest. The most widely used are the following: annual, quarterly, and monthly interest accrual. The others are relatively rare: half year, weekly or daily interest accrual. The method of accruing at a given interval is relevant for the cases when the bank calculates interest at regular intervals of time, for example every 12 days.
Shift in Interest Accrual Days
While most banks return the interest regardless of whether the next accrual date is a working day or a day off, there are banks which implement all operations on working days only in accordance with the occupational calendar. When under the contact the date of interest accrual or capitalization falls to a non-working day, the bank transfers the date to the nearest previous or subsequent business day. Due to such transfers the amount of accrued interest changes. In the column "Inclusion of days off and holidays", select the respective settings based on the data of your deposit agreement.
Saving the Deposit Calculation and Uploading in Excel
Once your deposit is calculated, you can download all the results to Excel and print them out. Each calculation receives its unique code (deposit_id), which you can later on use, for example, for reference or to make changes, if necessary.
Calculation of Effective Interest Rate and Profitability
The rate specified in the bank deposit agreement is nominal. It is the main, but not the only factor which influences and determines the actual amount of income to be received. Two other most influential factors are the frequency of interest capitalization and the tax withheld from the interest. With the same nominal rates, a deposit with a monthly capitalization will be more profitable than a deposit with an annual capitalization. Having calculated all the amounts and dates of accruing interest, the calculator gives the effective interest rate for the deposit, which identifies how quickly your money would multiply in the reference conditions, when the capitalization occurs once a year, and the tax is not involved. It is the value of the effective interest rate that it makes sense to use in order to compare absolutely different deposits. It serves as a "single nominator", showing the effectiveness of money deposited under absolutely different conditions. For the deposits whereas neither replenishments nor withdrawals took place, the calculator gives the value of deposit profitability, which is equal to the ratio of the net interest received to the deposit amount, but which, unlike the effective interest rate, does not take into account the period for which the income was received.
Interest and Inflation
In conditions when a constant increase in prices for goods and services takes place, it is wise to take the inflation rates into consideration in order to know the actual profitability of the deposit. Otherwise, there may be a situation when the calculated investment seems to be profitable (the value of the effective interest rate is greater than zero), but in reality the inflation not only nulls the interest amount, but reduces your deposited capital, i.e. the purchasing power of the deposited amount decreases. If the deposit term has already finished, the calculator will include the average annual inflation in Russia into the counting for the deposit period. If the deposit is still open or will be open in the future, the calculator will include the inflation rate in the Russian Federation for the last year. The percentage of euro and dollar exchange rates will be calculated for the same period. Comparison of the effective interest rate with these indexes allows you to see a more real picture about the profitability of the deposit.
Calculator of Deposits in Foreign Currency
With the help of such calculator you can calculate deposits made not only in rubles, but also in several other popular foreign currencies (euro, dollars, British pounds, Ukrainian hryvnia, Chinese yuan, etc.). At the same time, the amount of tax for withholding will automatically be converted into rubles at the rate of the Central Bank of the Russian Federation, effective on the date of transfer or capitalization of interest.
Accuracy of Calculation
A precise accurate calculation of the interest, deposit tax, profitability, effective interest rate, dates and amounts of payments is possible thanks to the presence of all the above features in the calculator. The depositor gets an independent tool to control and review the payments made by the bank. Other methods of verification are described in this article. If you find a discrepancy between the results given by the calculator and the amount you actually received, do not hesitate to write about it. During its existence, the calculator has helped to identify a number of cases of bank errors.