Questions tagged [interest]

for questions that relate to interest. Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets.

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0 votes
2 answers
130 views

Why offer at a lower interest rate on a loan then the expected ROI of investing in the stock market?

A quick google search told me that the expected ROI of investing in the stock market is roughly just under 10% That's admittedly a bit higher then I had anticipated, but quick scanning of their ...
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17 votes
9 answers
5k views

What would be a recommended interest rate for an unsecured loan to individuals with mediocre credit rating and income close to expenses?

I have a friend whose new wife is paying an absurdly high interest rate on her auto loan. They've asked if I was willing to loan them money at a more reasonable rate to pay off that loan and have ...
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2 votes
2 answers
48 views

Unusually inverted yield curve for time deposits

I found out the following time deposit rates of a bank: I understand the meanings behind inverted yield curves. However, the rates seem very unusual to me: The 18-month rate is far lower than the 15-...
-5 votes
2 answers
152 views

Could anyone help me how much my profit would be in 5 years if I start at $1000 and they said it would have a 5% income each year? [duplicate]

If I am to earn 5% annually and I started with $1000, how much would I have after 5 years? Is it too good to be true?
7 votes
1 answer
765 views

TreasuryDirect.gov not showing monthly interest gained on an I bond

I bought an I bond on treasurydirect.gov and it was filled on 10/1/2022 (more than 1 month ago at the time of writing). My understanding is that I bonds accrue interest monthly but when I login now it ...
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1 vote
0 answers
49 views

When will interest rates on savings accounts increase (UK) [closed]

Note: question related to UK savings accounts 4 days ago the Bank of England increased the bank rate from 2.25% to 3% which I understand will increase interest rates on mortgages and savings accounts ...
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1 vote
1 answer
47 views

Calculate Loan Balance and Future Balance with Extra Repayments

So, here's the current situation. I took out a £7000 loan over 42 months at the insane interest rate of 47.4%. I needed the loan, couldn't borrow it off family, and the interest rate is due to some ...
1 vote
1 answer
129 views

Does a Treasury Note Pay Interest on the Maturity Date?

I'm looking for a clear example of Treasury Note interest payments. I've read this on the TreasuryDirect website: Treasury notes pay interest on a semi-annual basis. When a note matures, the ...
2 votes
1 answer
105 views

Do mutual funds get interest on the cash positions in their portfolio?

I am writing a paper about mutual funds and I was wondering if mutual funds get paid interest on the cash positions they have in their portfolio. If so, what kind of rate would this be? Do funds use e....
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0 votes
1 answer
69 views

If you pay off a variable APR daily accruing credit card before the end of the month, is there interest?

Can you avoid 100% of interest on a card that accrues interest daily, by paying it off in full before the end of each billing cycle?
0 votes
1 answer
92 views

Is this simplistic interest rate used?

Suppose A is the initial investment, r is the interest rate (r > 0). The target interest rate model is then A(1 + r)^t, where t is the time since the moment at which the interest rate started to ...
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2 votes
1 answer
181 views

Compare Lloyds and Chase savings interest profit

So, Chase has a savings account for 1.5%. They calculate the 1.5% AER (1.49% gross) variable interest daily and pay it monthly. Lloyds, on the other had 0.20% gross interest (no more info given in the ...
1 vote
1 answer
101 views

Why are returns on term deposits so much higher in Canada (than in other countries)?

If one searches for GICs (Canadian equivalent of a term deposit) on the Canadian financial service comparison site ratehub.ca for 3 year deposits with 10 000 CAD as investment capital, one will come ...
0 votes
1 answer
93 views

Why didn't including a 1099-INT figure change the bottom line in my tax return?

I prepared a tax return with Turbo and saved as pdf. Later, I discovered a 1099-INT I had neglected to include, so I edited the return to include it. But it did not change the amount of the refund. ...
0 votes
2 answers
209 views

Is "buy now pay later" beneficial for consumer? (the four interest-free payments)

Recently, I listened to the podcast episode "Buy now, pay dearly" from Planet money about how companies offer an option to let you pay for a product with 4 interest-free payments. They ...
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1 vote
2 answers
87 views

Does partial prepayment on interest only loans goes towards principal

I am applying for 30 year term, 7/1 ARM with 10 year interest only loan. This is what I received from my lender: My question: During interest only period, if I make partial prepayments, does it ...
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3 votes
1 answer
80 views

Question about the investment calculator interest rate

I have a quick question question about this investment calculator. It is the website calculator.net/investment calculator Basically I put in my starting amount of investment is 4800, for 1 year, with ...
0 votes
0 answers
32 views

How to report interest on uncashed savings bonds?

I have a Series EE U.S. savings bond that matured in 2018, but I still haven't redeemed it. What do I put for the payer's name on 2018 Schedule B (Form 1040), line 1? More details: IRS Publication 550 ...
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2 votes
2 answers
202 views

Effective Interest Rate Calculation in Discounting

Quoting from "Numbers Guide" book by The Economist (sixth edition): "An even bigger discrepancy occurs with discounting of interest on many personal or consumer loans. For example, an ...
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0 votes
1 answer
71 views

Which days count when daily rate is used to calculate interest?

Say you get a loan on Jan 20 with monthly payments due 15th every month. You have the money in your hand some time in the middle of Jan 20 already, that’s the day when the contract came to existence. ...
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0 votes
2 answers
98 views

Where does the formula for terminal value come from?

I am a beginner investor and I had this doubt in DCF models of valuation. Where does the formula for terminal value even come from? Like I have seen this video: https://www.youtube.com/watch?v=...
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3 votes
2 answers
257 views

Friend has 90k USD after a home sale, use it to buy a new home in new location or pay down med school loans?

I have a friend. He is an up-and-coming doctor. This means he has about $160k in student loans. The interest rate is about 6%. In a month or two he is selling his house. From this sale he will have ...
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0 votes
1 answer
76 views

How do I report interest income whose non-resident tax was not withheld?

I'm a former resident of Canada who kept their Canadian bank account upon leaving Canada several years ago. It seems that my bank either did not receive or did not act upon my change of address ...
0 votes
2 answers
82 views

How does risk-free interest rate and interest rate differ on their impact on stock price?

According to investopedia: how interest rates affect stock market, "Higher interest rates tend to negatively affect earnings and stock prices (with the exception of the financial sector)." ...
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3 votes
2 answers
304 views

Time Value of Money — Interest Paid on Mortgage

You you bought a house worth $328,000. You paid 25% of the purchase price in cash and arranged a 25 year mortgage with a rate of 4.0% compounded semi-annually for the remaining balance. The mortgage ...
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-2 votes
1 answer
128 views

A foreign exchange reserves

A foreign exchange reserves manager is indifferent between placing a deposit in a foreign bank account or paying $98 to purchase a $100 zero issued by an advanced country government that matures in ...
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0 votes
2 answers
127 views

How to prioritize paying back loans based on interest?

If I have a loan at 0% and can get a 7% return on my capital, then I wouldn't want to pay back that loan until the absolute last moment. If I have a loan at 14% and can get 7% return on my capital, ...
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1 vote
0 answers
60 views

Accrued Interest Rate in times of Covid

I had about $3000 dollars in accrued interest prior to the Covid Forbearance period. I understand that there is no interest during this Forbearance period. I'm seeing that the accrued interest is $0 ...
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0 votes
1 answer
76 views

Calculating Total Interest on Loan

I have found some sites stating: Principal * Annual-Interest-Rate * Term-Length-Years ... but this does not calculate the total interest paid correctly. This formula neglects a shrinking principal ...
18 votes
8 answers
8k views

Can I take out a loan and pay it back immediately to avoid interest?

Ignoring why I would do so, I am wondering if it is possible to take out a personal loan (at, say, ~6% annual interest) and then pay back the principal + any interest back within a short time (within ...
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1 vote
1 answer
304 views

Formula for time taken to pay off loan with annual interest and monthly repayments

I am trying to find how to work out the period of time it will take to pay off a loan. There are plenty of online calculators out there but I cannot find the formula they use. I want to recreate the ...
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1 vote
1 answer
168 views

Pay seller from escrow before closing on property so mortgage can be finished?

Let's say seller does not want to grant extension to buyer so his lender could finish mortgage paper work. However, buyer has enough cash on hand and is completely capable to pay seller by original ...
8 votes
1 answer
259 views

Does Canada respect the tax-free status of National Savings certificates for residents who left the UK?

I know Canada and the UK have a tax treaty that is designed to prevent double-taxation. But I don't know if it extends to honouring the tax-free status of government-issued savings certificates. ...
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2 votes
2 answers
273 views

What is the cheapest way to pay off this loan?

I recently took out a loan in order to buy a car for work. The contract is over a five year term, with a total of 60 monthly repayments, at an interest rate of 13% pa. The way the lender wants me to ...
17 votes
10 answers
9k views

How can I buy things with monthly payments in the US?

I am a new international student in the US. In our country we didn't have credit cards like in the US and this is a new system to me. If I get a new credit card in the US with a $2000 credit line/...
-5 votes
2 answers
150 views

Compound Interest Problem [closed]

Vanessa decides to invest R 140,000 into an account earning 13.5% interest per year, compounded quarterly. This new account allows her to withdraw an amount of money every quarter for ten years after ...
1 vote
1 answer
89 views

How does the continuously compounded interest formula work in terms of months?

The continuously compounded interest formula is: Pe^rt Where: P = Principle e = 2.718... r = Annual interest rate t = time in years If instead of an annual interest rate, I got a monthly interest ...
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2 votes
1 answer
32 views

How to calculate perpetuity when interest calculation interval is different from the cashflow interval

I’m trying to calculate the present value of an investment scheme I was suggested with. The scheme is, I have to invest say $100 in every quarter perpetually. Now I know how to calculate it (the ...
14 votes
4 answers
4k views

How can bonds reach 0 and negative interest rates? why would someone buy them? [duplicate]

I know what coupon rate and yield to maturity is but I do not understand very well the interest rate of 0.07% in 1 year Treasury bonds, for example. And how can bonds reach 0 and negative interest ...
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-4 votes
2 answers
225 views

Have I correctly understood the logic of lending money to a bank? [closed]

Let's say that I am able to convince my local bank to borrow 1 Bitcoin from me today, with them allowed to hold it for at least a year before I am able to ask them to give it back. After a year, if I ...
1 vote
0 answers
75 views

Pennsylvania Taxation of Treasury Bonds Purchased on the Secondary Market

How does Pennsylvania tax the following items for TREASURIES (purchased on the secondary market): Accrued Market Discount (1099-B Box 1f) Bond Premium on US Treasuries (1099-INT Line 12) Accrued ...
2 votes
0 answers
53 views

Who earns the interest during a naked short sell, where the shares haven't been located yet and fails to deliver

When someone naked short sells, who do they pay the interest to? If they never locate the shares, then there isn't a shareholder to pay. Do they pretend to pay interest? Do they actually pay interest? ...
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1 vote
1 answer
69 views

Can a bank continue to allocate payments to interest even after they have taken what the contract states?

I purchased a car, borrowing money from a bank for the auto loan. Long story short, I asked the bank for a detailed history of my payments, and they sent me a document that shows every payment I've ...
12 votes
5 answers
6k views

Interest: what is the most strategic time to make a purchase: just before or just after the statement comes out?

In order to pay a lower interest rate on my credit card balance; is it better to make a purchase just BEFORE the statement cycle ends and the next one begins; or just AFTER the cycle ends and the next ...
2 votes
2 answers
66 views

Can adding a 1098 from another mortgage bank lower my deductible interest? How?

I'm a long-time homeowner. In 2020, I refinanced my home. Due to the refinance, and switching mortgage banks, I made mortgage payments to three different banks in 2020: Bank A (original mortgager): 8 ...
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0 votes
2 answers
123 views

Help Calculating Monthly Earnings with two co-existing APYs in same "Savings" Account from T-mobile Money

Background I have a T-Mobile Money (via BankMobile, a division of Customers Bank) interest checking account. I'm trying to track earnings per month but I'm a bit confused by their fine print and their ...
0 votes
1 answer
421 views

Do rich people never have to pay back what they borrow with their wealth as security? Does the same apply in my case?

I heard something very interesting today. Apparently, people who are the descendants of early New York City plot owners, never sell their land. Instead, they borrow money from banks (or some entity) ...
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34 votes
7 answers
3k views

How does a bank lend your money while you have constant access to it?

How do banks / fintechs lend your money while you have constant access to it, ie. can withdraw at any moment? I assume there is some kind of liquidation pool, but how exactly is that managed with ...
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2 votes
1 answer
102 views

Should I take money out of my CD to pay towards my mortgage?

I need some help with the correct math to help me answer this question. I have a CD that has a 10 year term, earning 4%, that I put $25,000 into to start. I have roughly 2 years remaining on my CD. I ...
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1 vote
1 answer
60 views

Does bank interest paid offset interest received?

I'm gathering information for my US income taxes. I received $100 in interest on my savings account. However, I also paid $100 in interest on my overdraft line of credit. Do they cancel out such ...

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