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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54 views

1099-int concern, tax filing

My credit union issued me a 1099-int for savings bonds that were cashed in 2023. Is it correct to say that box 3 of the 1099-int be the total of the interest earned plus half the face value of the ...
4 votes
2 answers
161 views

How to calculate monthly payment of a loan

I am trying to solve this question: Your brother-in-law asks you to lend him $100,000 as a second mortgage on his vacation home. He promises to make level monthly payments for 10 years, 120 payments ...
0 votes
0 answers
38 views

Wise cash balance interest program and NY state residents

Why is it that the cash balance program (and consequent FDIC insurance) that Wise offers its customers is not available to residents of New York State? Is there any way around this?
11 votes
5 answers
5k views

Is exceeding the U.K. Personal Savings Allowance - and being taxed - a bad move?

I’m based in the U.K. and in 2022 inherited approx £370k I did not have any debts, except a mortgage on my main and only home, which I paid off in full. I made use of my full £20k ISA limit over the ...
0 votes
1 answer
40 views

Present value of an annuity by formula and calculator different

I'm having some issues understanding how TVM calculators as compared to the present value formula works, they should give the same result but they don't. The questions is: Suppose you are considering ...
6 votes
4 answers
3k views

How exactly does a biweekly payment schedule on your mortgage reduce the amount of overall interest paid over the life of the loan?

Here is how a normal fixed-rate monthly amortization schedule is calculated: First we determine the total monthly payment: Payment = [P*(r / n)(1 + r / n)^nt] / [(1 + r / n)^n*t - 1] where n = 12, P ...
1 vote
1 answer
165 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 ...
8 votes
1 answer
407 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. ...
2 votes
0 answers
39 views

Can you withdraw capital gains from a stock sale and still deduct interest on the original cost basis?

Say you borrow 50k and buy 100k of shares. Then the stock rises to 100k You sell half and cancel out the loan, but also have 50k of capital gains. If you withdraw the 50k gain to maintain the original ...
1 vote
0 answers
39 views

Questions regarding Adjusted Gross Incomes and their calculation

I was recently asked to provide my AGI by a governmental service outside my country and was wondering about its calculation, since Indian Tax Returns (ITRs) don't have a specific header for it. Should ...
3 votes
1 answer
108 views

Apportionment of buy-to-let mortgage interest

I live in the UK and am a higher rate taxpayer (40%). If I have a buy-to-let property, I understand I can claim mortgage interest relief at 20%. Effectively I can only use half the interest as an ...
-2 votes
2 answers
277 views

Borrowing money for investment

What do you consider the best way to: Borrow money from private investors against a fixed interest rate Use it to trade, yielding a higher return than the interest rate Pay off the investors with ...
0 votes
0 answers
59 views

Option Volatility and Pricing : value of a stock option will also depend on whether a trader has a long or short stock position

Book: Option Volatility and Pricing Chapter: Risk Measurement I Topic: Change in interest rates can affect options The value of a stock option will also depend on whether a trader has a long or short ...
18 votes
6 answers
4k views

Inflation-linked bonds — what's the catch?

This the question Why is there a discrepancy between current inflation rate and I bond rate in the US? I have learned that, at least in the USA, there exist bonds where the yield is guaranteed to be ...
0 votes
1 answer
91 views

Can buying mortgage points reduce a rate below the applicable federal rate?

And if that is possible how does this prevent the bank from avoiding paying imputed interest. Additionally could points be purchased to bring a rate to zero or a negative number?
-2 votes
1 answer
443 views

Should I pay the current balance or the remaining statement balance to avoid paying interest on my US credit card? [duplicate]

I have a credit card. I used it to make a few payments. In my account, I see: If I want to avoid paying any interest or late fees, do I have to pay the current balance or the remaining statement ...
1 vote
1 answer
237 views

How to calculate how much more paying off a loan with extra principal payments saves vs extra payments?

So I recently wrote my loan provider on whether the extra online payments I was making were applied directly to principal and it turns out they were not, they were just treating it like extra pre-...
1 vote
1 answer
1k views

If interest rates remain the same, what effect would this have on long term treasuries?

I'm interested in gambling a few thousand on TMF, a triple-leveraged 20+ year bond fund. It tracks the daily returns of the ICE US Treasury 20+ Year Bond Index. If the Fed neither raises nor lowers ...
1 vote
2 answers
129 views

How to combine compound interest formula with inflation?

Given a compound interest formula for an investment of FV = PV(1 + r/n)^nt, with a different APR for each year and a timeline of 2.5 years, how could this be combined with an inflation formula of R = (...
12 votes
5 answers
6k views

Should I pay off mortgage or invest in CD?

I am confused about the mortgage rates in APR vs CD rates that I could invest in [US]. I have a mortgage loan that I got with 2.875 APR. I could pay that off or invest that money in a CD with rate of ...
1 vote
0 answers
76 views

Varying interest charges on car loan

I am making my $386 a month car loan payments each month on time. I just looked at the payment history and the amounts of principal and interest vary widely each month. For example: October: Balance ...
5 votes
7 answers
5k views

How does paying extra on my mortgage affect my amortization schedule?

I am a first time home buyer and have some spare cash after my home purchase to pay forward quite a bit of money (cash was not available during actual purchase, so, no, I could not have put it towards ...
3 votes
2 answers
294 views

What is facilitiy fee in islam

Ethio telecom offer credit to his customer with rate of facility fee repayed at fixed date and also fee with daily charge. Is there a diffrence between the two term mean facility fee(service charge) ...
2 votes
1 answer
886 views

Is there a function/formula for the principal and interest lines in a mortgage graph?

When you use a mortgage calculator sometimes the results coming with a graph as well showing interest and principal paid every month. Image below... Is there a formula/function that defines those ...
1 vote
1 answer
196 views

When is interest incurred while trading on margin deductible in Canada?

To clarify my understanding of margin loans in Canada: the interest expense incurred while trading on margin is deductible, as long as the stock pays dividends, right? Also, if it is deductible, would ...
0 votes
0 answers
27 views

Can I carry forward investment interest expense even if I take the standard deduction? [duplicate]

On IRS 2022 Form 1040, if I take the standard deduction, I don’t think I’m allowed to deduct investment interest expense on Schedule A, line 9, but can I still file Form 4952 to report any disallowed ...
0 votes
1 answer
50 views

How do I know if selling equity is better or not in this problem?

In this exemplar situation, how do I know if selling my equity is better nor? Situation: I have a small business which I am a 50% owner of. The business is currently worth $6,000,000 and is making $...
1 vote
1 answer
1k views

How do I calculate the interest rate on my Treasury bill given an evaluated price?

Ex: I'm looking at the 3 month (13-week) Treasury bill here, maturing 11/16/2023. The evaluated price is 98.617417. So is the interest rate: (100 - 98.617417)/98.617417 * (365/(13 * 7)) * 100 = 5....
0 votes
0 answers
113 views

Why is there no double rollover interest for forex trades carried overnight on Thursdays?

Why is there no double rollover interest for forex trades carried overnight on Thursdays? I have been looking everywhere to find an answer to this question, and finding absolutely nothing. I'd ...
3 votes
1 answer
2k views

How can the purchase cost of a treasury bill be more than its face value?

I'm considering (non-competitively) purchasing a 52-week Treasury bill through Treasury Direct. As I understand, the purchase price is reduced by the discount rate and therefore is always less than ...
1 vote
2 answers
110 views

Additional principal payment split between interest and principal [duplicate]

I made an additional payment with my first mortgage payment but I noticed that although I designated the additional payment, say $10, as principal the remaining principal balance didn't go down by the ...
10 votes
2 answers
4k views

Is there any advantage to a longer term CD that has a lower interest rate than a shorter term CD?

From what I understand, long term certificates of deposit (CDs) typically offer higher interest rates than short term CDs. They do that to give you a reason to lock up your money for a longer period ...
2 votes
2 answers
143 views

Effect of FED/ECB interest rate on EUR/USD exchange ratio

In 2016, the ECB has lowered interest rate to 0%. Some people assume that within the next few years, the ECB will increase the interest rate. How would that most probably affect the EUR/USD exchange ...
0 votes
0 answers
15 views

Thursday morning open interest data for newly listed weekly options

The open interest data is available for the newly listed weekly options during the market hours on Thursdays. Yet the open interest data supposedly gets updated once per day after the market close. ...
0 votes
4 answers
221 views

Does the expected return of a stock ETF depend on the current interest level? At which interest rate are stock ETFs no longer recommended?

Is there an interest rate such that there is no point in putting money into the stock market (e.g. in a stock ETF that models the stock market) but where the interest rates of almost risk-free ...
1 vote
1 answer
113 views

Calculating CAGR for Ordinary annuity

Basic compounding interest question: I paid 5000 every month for 12 months and got 67500 in return, what was the annual compounding intereset rate? I considered formular as follows: FV = PMT(((1+r)^...
2 votes
1 answer
106 views

How do I Calculate future monthly loan payments after interest-only period ends?

When I was in school, I was paying only interest on my Sallie Mae student loans. Now that I am graduated, my payments are made on the interest as well as principal. I am trying to calculate my monthly ...
0 votes
1 answer
271 views

Why is the interest on EUR so much lower than USD?

https://www.interactivebrokers.com/en/accounts/fees/pricing-interest-rates.php 4.330% vs 2.245% Difference isn't explained by the inflation difference
0 votes
0 answers
649 views

How does HSAV ETF convert interest income into capital gains income? (canada)

I came across this ETF Fund from Horizons called HSAV, which invests the money across Canadian bank high interest savings accounts. Rather than redistribute interests like a money market fund, the ...
0 votes
1 answer
55 views

Is margin interest deductible in Pennsylvania

I am filing taxes for a family member and they have a sizable amount of investment income in 2021, as well as some margin interest. Both the internet and my tax software made it clear that I can ...
0 votes
1 answer
84 views

Do student loans capitalize daily after the grace period?

As I understand it, for many student loans, when you take out the loan, there is a daily, fixed, simple interest that accrues. This accrues on the principal but does not capitalize. Therefore, if I am ...
0 votes
1 answer
50 views

How to calculate imputed interest on options trades?

All interest income (including imputed interest) must go on 1040 line 2 taxable interest. For example, if the interest rate is 5%, then I can buy 100 T-Bills for $95 each. After 1 year I get $100 per ...
36 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 ...
1 vote
2 answers
804 views

Multiple day ACH transfer - is there a day when neither bank is paying interest?

If I transfer money from my account at bank A to my account at bank B, using a free multi-day ACH transfer, is it common that I would not be paid daily interest for the balance while the transfer ...
1 vote
1 answer
148 views

Possible incorrect tax exemption on form 1042-s? Where to show 1042-s interest income on 1040?

I have interest income on 1042-s, but was exempt from tax. My Box 3a is "02" and 4a is "15". "02" refers to - exempt under IRC (code should only be used if no other ...
1 vote
2 answers
401 views

Where do interest payments go?

I understand that in many countries the base interest rates is set by a central bank. They do this by changing the amount they charge for overnight loans to the large banks to cover transfers. But ...
6 votes
5 answers
546 views

Doesn't the existence of FDIC incentivize savers to put their savings in the most risky bank?

The riskier something is, the more interest/coupon would be demanded by the lender. In the case of choosing where to put my savings, wouldn't the existence of FDIC incentivize searching for the bank ...
0 votes
0 answers
111 views

How to calculate monthly CPI on a private loan over a couple of years?

I have borrowed money from a family member, and I have been keeping track of exactly how much I owe them down to fractions of cents. The amount owed has been steadily growing by a couple of hundred ...
1 vote
1 answer
131 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. ...
1 vote
1 answer
159 views

How shall one take into account the accrued interest when purchasing a bond on the secondary market?

For example, I'm looking at the following US Treasury bonds ordered by decreasing yield to maturity (YTM) on Charles Schwab: If I simply want to maximize the returns, assuming no default risk, should ...

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