# Comparing differing types of accounts

Discussion in 'Deposits' started by Mike, Nov 17, 2016.

1. ### MikeNew Member

Posts:
4
First of all thanks guys for such an informative resource.

I was wondering if anyone could help. I am trying to determine the best account for some of my savings.

Is there a simple calculation to determine what interest one would earn from different accounts e.g. regular saver account vs. fixed term deposits.

2. ### rob oyleFrequent Poster

Posts:
399
In short, the interest rate on a regular saver account should be half the sum invested during the year at the interest rate OR the sum invested at the end of the year by half the interest rate (the same calculation ultimately).
What this means is if you're saving 500 a month and you have (say) a 2% rate on the account, the interest earned is roughly 0 (the opening balance) PLUS 6,000 (the end of year balance) MULTIPLIED BY 2% (the interest rate available) DIVIDED BY 2 (to take account for the fact that the funds in the account were built up over time). This would roughly be €60 interest before DIRT.

Now, you're comparing apples with oranges when it comes to comparing term deposits with regular saver accounts. Typically additional funds cannot be added to or taken out of term deposits once it has been set up. Typically a lump sum cannot be lodged to a regular saver account. If you have a lump sum, you could drip feed it into a regular saver account FROM a interest-paying deposit account and that way you'd have access to the funds if plans changed. But what suits you really depends on more than just the maximum interest rate available.

3. ### dub_nerdFrequent Poster

Posts:
1,255
Very slight correction to the above. The return on a regular saver account is half the interest rate in the limit where "regular" means continuous, i.e an infinite number of infinitely small deposits. In general, where R is the annual interest rate and n the number of annual deposits of equal amounts, the return is equivalent to an annual rate of:

$\frac{n+1}{2n}R$

For example, a regular saver paying 2% with monthly deposits would return (13/24)R = 1.08%.

4. ### MikeNew Member

Posts:
4
Thank you so much guys, really appreciate it!