+0

# Help with Compound Interest Question

-1
67
7
+79

Really need help!

Option 1 or 2? Its a simple question but my brain isn't working so I can't figure it out :(

The Question:

If I have \$60,000 in savings currently nd plan to save \$1,000 per fortnight, which is the best account for me?

Option 1:

My current savings account is a special savings account. It has a basic interest rate of 0. 1% but if you deposit more than \$1,000 in a month and have no withdrawals, then you get bonus interest of 1.8 5% for a total of 1.95% p.a. (Interest is calculated daily.)

Option 2:

The bank just emailed me asking if I am interested in a new BONUS SAVER Account that they are trialing to special customers. It has a bonus rate of 2.5% p.a. on all new deposits for the first 4 months and then the interest rate drops down to 1.0% p.a.

However, all interest on new deposits will still be at the BONUS RATE of 2.5% (for 4 months).

May 5, 2020

#1
0

You can only determine which option is "best" if you specify the term of the investment. In other words, how long do you intend to invest your money for. 1 Year? 5 years? 10 years?.....etc., since you have a large up-front deposit of \$60,000.

May 5, 2020
#2
+79
+2

Assume that its for 10 years

MathsLlama  May 6, 2020
edited by MathsLlama  May 6, 2020
#3
0

Do you understand the problem? And if so, how much work have you done on it?

Guest May 6, 2020
#4
+79
+2

I dont understand how to do it.

I only need the answer but working out would be amazing as well

May 6, 2020
#5
+1458
+4

Also just curious what is this answer for?

hugomimihu  May 6, 2020
#7
+79
+2

Just a random maths question...

I was bored and wanted help understanding a future topic.

MathsLlama  May 8, 2020
#6
+109486
0

Hi Hugo,

Do not worry this time but in the future, if you can find it easily, please add the address of the alternate post. (In a link)

This is more for the benefit of other users than it is for the asker of the question.

Thanks.

May 6, 2020