How Is Interest Calculated On A Savings Account?

Savings accounts are basically accounts which are kept by commercial financial institutions, savings and loan organisations, credit unions, etc which pay interest but one cannot use them in a direct manner in the form of money, like for instance by writing a cheque. Such accounts enable the customer to keep aside a part of their liquid assets which could serve to acquire goods or services while earning a monetary benefit.

Generally when one puts money in a savings account, the bank pays one the interest as per how much the person deposits. In other words, the bank is simply paying you for the licence of 'making use of' your money. The quantity of interest which one earns on a savings account is calculated by multiplying the money which is deposited, by the rate of interest which the institution offers.