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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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 ...
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1 vote
1 answer
95 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 ...
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0 votes
1 answer
55 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. ...
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0 votes
2 answers
206 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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2 answers
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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
76 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 ...
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0 votes
0 answers
27 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
191 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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1 answer
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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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  • 101
0 votes
2 answers
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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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  • 101
3 votes
2 answers
251 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
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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 ...
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0 votes
2 answers
78 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
293 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
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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
126 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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  • 101
1 vote
0 answers
59 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
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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 ...
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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
174 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
165 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 ...
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8 votes
1 answer
215 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
268 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 ...
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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/...
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-5 votes
2 answers
147 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 ...
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1 vote
1 answer
65 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 ...
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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
219 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 ...
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1 vote
0 answers
70 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 ...
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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
67 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 ...
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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 ...
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2 votes
2 answers
64 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
106 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 ...
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0 votes
1 answer
413 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
97 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
59 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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4 votes
2 answers
164 views

what percent of my investments can I take out annually if I want it to still grow after beating inflation and taxes annually?

I'm interested in learning how much money one might have to save and invest if they are aiming to live purely off of the capital gains from their investments while still allowing their money to grow ...
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1 vote
0 answers
41 views

Interest Rate and Present Value Question

I'm trying to answer the hypothetical question posted below (for educational purposes) but I'm very confused about its wording regarding the interest rate. If I assume that the interest is compounded ...
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0 votes
1 answer
68 views

Are all cryptocurrency exchanges and financial lending institutions required by U.S. law to provide a 1099 form to the investor?

I am currently thinking of putting up a portion of my crypto assets on a reputable cryptocurrency lending platform. I asked them if they provided a 1099-INT for the interest that I would earn on my ...
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0 votes
1 answer
236 views

Calculate value of investment with variable interest + periodic payments (Excel/Google Sheets)

I know about FV and FVSCHEDULE but how do I combine them? Say I make monthly payments into an account with a variable interest rate ... how do I calculate future value? Or do I have to build out the ...
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  • 191
3 votes
3 answers
268 views

What is a good starting point for a new investor?

Firstly to clarify, I am not looking for financial advice, I am trying to find out where is a reasonable starting point for someone who has no experience, some cash in an ISA and is risk averse. I've ...
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0 votes
1 answer
66 views

Unpaid accrual expenses [closed]

Let's say for-profit corporation ALPHA INC. borrowed $1M from person JOHN DOE, who is also an executive officer of the corporation. The corporation ALPHA INC. uses accrual accounting method, while ...
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  • 105
0 votes
2 answers
79 views

Should I focus on repaying private or federal student loans during Covid-19 and CARES act?

The CARES act puts the interest rate for federal student loans at 0% until December 30th and there are no mandatory payments for student loans until that time. I owe $32,000 in federal loans, normally ...
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  • 101
1 vote
4 answers
631 views

Why do banks pay a compound interest on deposits instead of simple interest?

Why do banks pay a compound interest on deposits? Obviously they'd be better off paying a simple interest instead, which would still be attractive to their customers. However I figured that in such a ...
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-2 votes
2 answers
323 views

Are there ways for me to generate $40k per year in perpetuity from $300k? [closed]

Why or why not? Even if I did get $40k once, how unlikely is it to happen again? Some obvious answer are getting a job paying $40k a year (reasonable, but not what I'm asking) and spending the ...
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0 votes
1 answer
167 views

An investor holding an 8% subordinated debenture will receive how much at maturity?

I came across this question in the Wiley Series 7 2020 book: An investor holding an 8% subordinated debenture will receive how much at maturity? a. $1,000 b. $1,080 c. $1,040 d. Depends on the ...
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4 votes
5 answers
2k views

How to separate interest paid on a credit card between personal and business expenses?

My wife has a home business selling clothes. She purchases all her inventory with a credit card but she also uses the card for personal expenses. I understand that on the IRS Schedule C, we can write ...
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