Bank savings account interest rates

whenever you see interest rates you always have to think yearly.

i get 5.25% maturing on a monthly basis. Means i dont freeze my money for a whole year i just keep rolling them over automatically month after month. Its a matter of liquidity and ease of access to my money for me. The only advantage is you get a higher rate if left to mature over a longer period of time but the difference is not felt unless dealing with large amounts of money.

interest rates are always on yearly basis not monthly basis. so when they say 6% they mean 6% per year i,e 6/12 per month.

and its not true that they give you 6% for whatever amount you deposit. it's amount dependent.

Interesting thread. How does 6% (.5 per month) compare to inflation?

Is it 6% on the first deposit or on the accumulated current sum? Let's say if you withdraw the interest every month.

From what I know, normally, it is accrued every year, but maybe in this case he meant it is compounded monthly, which makes it much more interesting.
But what is the inflation?? Without knowing the inflation we don't know if we're making any money at all!

rolf wroteInteresting thread. How does 6% (.5 per month) compare to inflation?

Here's the data for inflation since 1994.

The way the bank calculates the interest is what matters, not how much interest percentage they promise to give. From my experience dealing with banks, this is where the devil lies: within this detail, so for anyone tempted to put his money in a time saving account, please be alarmed. I can write a paper about this subject and expose banks bad deeds but for now here's what I am sharing so bear with me. Simple interest is the best way to go, but banks only use that when lending money. Simple interest = Yearly interest / 12 = the net monthly profit the banks keeps in his pocket. But, on the other hand, when you open a saving account they calculate the interest using a method that suits them better: a compound interest but with a trick. Compound interest takes into account the calculated sum and not the initial balance and this should be taken into consideration when dealing with 1 month, 3 months or 6 months maturity. So where is the trick?

NuclearVision wroteIs it 6% on the first deposit or on the accumulated current sum? Let's say if you withdraw the interest every month.

It is on the accumulated current sum, but if you withdraw the interest every month you will not reach your yearly promised interest rate.

So how does the bank know how to calculate the interest rate on a monthly basis? Using Compound Interest Formula that can be tested using this calculator.

So for 5.25% interest => 5.25% compound annually is equivalent to 5.12775% compound monthly. (Monthly is better recommended than yearly when not wanting a long term investment)

For 15,000,000 you will get first month: 15000000 * 5.12775%/12 - 5% tax = 60,892 LL of which they will submit it to further deductions and fees.

So if you want to invest in banks, expect pennies and when you go there ask for monthly net profit on your balance, don't let them tempt you with meaningless interest rate number.

As for inflation, I use this cool calculator to simulate numbers for a retirement plan. But don't get caught with inflation too much, because the only way to beat it is by buying gold and silver and this is a different subject.

@Guitaret I am sure a lot here are interested in knowing more about this subject, could you release this paper for educational purposes ?

nefe_lpmk wrote@Guitaret I am sure a lot here are interested in knowing more about this subject, could you release this paper for educational purposes ?

I appreciate your consideration but currently I don't have the time nor do I know a publisher to do so, & even if do, I don't want to invest an effort to start a minuscule tackle against banks. However, I am equally delighted in raising awareness in the matter whenever I could and in sharing what is needed in this subject to my fellow lebgeeks.

Instead of opening a new post, I though of pinging an old one:

Since the Hariri resignation issue, saving interests offered by banks has been going up for sure but I haven't got or heard a confirmed number yet. Have you guys heard or got offered anything?

Thanks

You can get up to 7% if you have a huge deposit as far as I’ve been told.

Depends on whether it is in LBP or USD. LBP pays higher interest rates. A great deal on USD would be around 4.5% if you have 100k+ $. LBP is about 6.5-7% for the same amount.

If you have a "wasta", you can pretty much get these rates regardless of the amount you're willing to deposit. But for the average Joe, you need a fair chunk.

I have heard numbers higher than this but anyway I appreciate your feedback guys.

Currently getting 6.25% with Fransabank for an LBP account with monthly maturity and between 50m-100m. It can go to 6.5 with 3 months maturity.

I shopped around a lot and for the monthly maturity that suits me, Fransabank was the best.

Mind you when you factor the fees they charge and the taxes the government charges, the real return drops to 5.62% in my case.

Guitaret wroteI have heard numbers higher than this but anyway I appreciate your feedback guys.

The high numbers you heard about (>9%) are for
- Very high amounts (Milliard...)
- "Mjammadin" for a year or more

Guitaret wrote
I have a 6% deal with BOB on monthly maturity account but the real end of year return is 5.66% (including tax and fees...). It all depends on how their internal system works, some banks exclude interest on public holidays for example.

All in all I think BOB is fine for now and I appreciate sharing your info.

Yeah, that's true. I am not sure about the public holidays being included or not but Fransabank charges 7,500 at the end of maturity so with monthly maturity, one ends up paying 12x that amount which eats from the nominal rate. The rest is taxes which is 7% now of the nominal gain.

Of course as the total amount of savings increases, the smaller the 7,500 will be in terms of percentage as compared to the whole, but with 6% nominal and 5.66% real, that's pretty impressive.

I would appreciate if you can share the fees BoB charges for such an account. Another bank with lucrative returns is BLF. They always call offering great rates but for 6 months+ maturities.