Jump to you still want to be paid monthly? This is very useful for student loans because current expenses such as living expenses or tuition can be covered by the loan. The amount of the installment depends on several factors: loan amount, term, interest rate, method of payment. Although it is customary to repay your loan on a monthly basis, there are also variants where the payment is made annually or quarterly. Student loans differ from ordinary student loans or installment loans in several ways.
Term money with monthly interest payments – better or less than usual?
Usually, a term money account is set up and then left lying around until the end of the term, while the credit increases year by year due to the compounding. However, there is also the option of paying out the interest income as a transfer instead of the total amount plus interest.
1,000 net loan amount, 12-month period, 0.00% fixed debit interest pa, monthly installment $ 83.33, total $ 1,000, fund management company. The interest on fixed-term deposits in Germany is very low at 1-2% per annum compared to the investment amount. That does not make you particularly valuable at the moment, even if you invest time deposits in Germany.
The calculation example makes it clear that anyone who has invested 5,000 USD over 5 years at a current interest rate of 2 percentage points will end up earning only 520 USD. If you consider that you have been waiting for 5 years and initially did not make a small investment of 5,000 USD, you can imagine it quite differently.
The profits are good, no doubt – better than nothing.
But this article is also not about the question of “fixed money yes or no”, but about the possibility of compensating for such a total interest on a monthly basis. These 520 USD from 5 years old, we calculate how much the monthly amount will be:
Only 8,66 USD. It does not matter if it arrives on the account every month. The monthly payments are especially for speculative and high-return investments such. Shares, bonds or good investment funds. You should calculate the amount of the monthly interest payment in the specific case with the help of a fixed-term calculator or the fixed-interest-rate formula.
However, the fixed interest rates for monthly payments are lower (eg only 1.9 instead of 2.0 percent). For fixed-term deposits, there is a sort of interest rate special in that 2 percentage points of the originally invested amount are not just added for more than 5 years, but are added to the interest income already earned in the further course of the price.
If, for example, you invest USD 5,000 and generate interest income of USD 100 in the first year, interest will be paid in the amount of USD 5,100 instead of USD 5,000 in the following year. However, there is never such a large interest income per year and so the compound interest effect in this example is only a drop on the hot stone.
However, if the interest on time deposits is paid once a month, this influence is also eliminated. Because in the end only the first 5,000 USD remain on the time deposit account. There is no special procedure or requirement for a monthly payment. You must therefore contact the house bank or the provider independently and demand the monthly payment or payment per quarter.
For some providers, there is even a monthly interest on time deposits, others not. What did you experience with the monthly interest on fixed-term deposits?