Certificate of Deposit

Archive for October, 2007

Question: I am thinking about opening a Money Market account with Wells Fargo but I need to know some info.?

How can a bank make money if they pay .50% intrest daliy is the intrest compounded ie. I place $1000 x .50% x 30 = $1150, so next month do I gain intrest on the $150 or is it like a CD?
Also are there any more fees than the 10$ monthly service fees if my balance drops below $3,500?
How can a bank make money if they pay .50% intrest daliy is the intrest compounded ie. I place $1000 x .50% x 30 = $1150, so next month do I gain intrest on the $150 or is it like a CD?
Also are there any more fees than the 10$ monthly service fees if my balance drops below $3,500?

This is were I get my .50% from http://www.bankrate.com/brm/rate/mmmf_mmaratehome99.asp?params=CA,283&product=33

Answer: I seriously doubt it’s .5% daily. That would be an annual interest rate of 183%. No one pays that much and there is never a guarantee on how much money you make in a Money Market account. Most likely, it is .05% which would be 18.3% annually netting you $183 by the end of the year. This would be an incredibly risky investment and could lose you as much as it makes for you. Now I’m guessing that if you’re looking at Wells Fargo for investing, they will not put you in anything more than 10-13% annually. This would be considered a high risk Money Market account even at 10%, but would be more likely when it comes to netting money. If you are looking for something more risky then that, you will have a hard time finding it in a Money Market account. Growth like that usually only happens when you purchase one stock at a time. Money markets buy many stocks, as many as 50 at a time.

Hope this helps.

The Story of Wells Fargo

Question: Certificate Of Deposit?

Can some one tell me how to calculate intrest on a CD. Lets say I have 5% intrest on a $1000 CD that is compounded daily. Would not 5% of $1000 be $50.00 if so then I should be making $50.00 a day right?

Answer: If the interest compounds DAILY, then you get:

$50 for the first day

5 % of 1050 the second day = 52.50

each day you get 1.05 x the previous day’s balance.

Usually the interest compounds ANNUALLY (once a year). Mockingbird is correct for an annual compound, not for a daily compounding interest.

Interest Bearing Accounts and Inflation

Question: Is being backed by FCUA as secure as FDIC?

I have CDs and Money Market accounts with Sun coast Credit Union. Am I as Secure as I would be with the money in a bank that is FDIC backed?

Answer: If you mean the NCUA, yes, for all practical purposes.

FDIC Insurance Limits and Indymac Bank Loan Modifications