Which savings account will earn you the least money?
A. One that compounds interest daily.
B. One that earns simple interest monthly.
C. One that earns simple interest daily.
D. One that compounds interest monthly.
Which savings account will earn you the least money?
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The savings account that will earn you the least money is B. One that earns simple interest monthly.
Here’s why:
– Simple interest does not take into account the effect of compounding, meaning it only calculates interest on the principal amount.
– The other options involve compounding, which means you earn interest on both the principal and the interest that has already been added to it. Compounding, especially, daily or monthly, tends to yield a higher return than simple interest.
Feel free to ask more questions if you have any!