Interest calculated on short term deposit?

[MacMun]

Hoping somebody can help me. I have 60,000 maturing on a 6 month deposit @ rate of 1.6%. Bank has calculated interest less DIRT of about 280 euro. Am I being thick but 1.6% of above = 960 euro less 393.60 (41%) = 566.40.

I asked how they came to their calculation and bank official going on about rate being calculated on a daily basis, yada yah, blah, blah.

Are my calculations incorrect? I am going back tomorrow as I didnt have time to argue with her today.

 

[Protocol]

Interest rates are always quoted per annum.

You would earn half that, as your savings were on deposit for six months.

 

[Boyd]

Very rough calculation but I'm guessing that 1.6% is the APR. You only had the cash on deposit for 6 months so if you half your calculations you end up with E283 quid interest.

60, 000 @ 1.6% = 960. Divide by two as only on deposit for 6 months = 480 gross interest. 480 - DIRT (480 * 41/100) = 480 - 196.8 = E283.2

I'm open to correction but looks about right to me.

 

[MacMun]

Thanks Protocol, silly me, it is down as 1.6% on my deposit account and that is what I was led to believe when I signed up for it. Why don't they just say 0.8% for 6 months then!!

 

[Protocol]

The law says all interest rates must be quoted as AER, which means Annual Equivalent Rate.

This allows easy comparison, as all rates are annual.

Note that they may mention the six month or fifteen month rate, but they must also publish the AER.