[frajoy]

Just how is the interest paid on savings figured? Say, for instance, I have $10,000.00 in my saving account and the interest is 3.5%. How much interest will I earn at the end of the month and how is this figured??

[shunned]

Approximately that would be 3,500 a year divided by 12 = 291.66 a month.
That's the way I figure it. I could be wrong, and If I am I'd like to know something more exact.

[CaptainForest]

How it works is that every month you will earn interest equal to 1/12 of 3.5%

So, 3.5% x 1/12 = 0.29167% / month

But, if you were to leave your money in the bank, your accumulated interest rate would be higher than 3.5% because your total money in your account goes up each month due to the interest you are receiving.

Month 1 = Interest = 10,000 x .035 x 1 / 12 = 29.17

SHUNNED miscalculated. Total approx. yearly interest would be $350 NOT $3,500

10,000 x .035 = 350

[ScottGem]

Just to add to Captain's more accurate answer. Most banks pay interest on savings accounts that is compounded. This means the annual interest is divided by the compunding period (Daily, weekly, monthly) and applied to the balance at the end of that period. So basically you earn interest on interest.

You need to make sure what type of compounding the account carriers to calculate the interest.