Certificate of Deposit

Archive for the ‘Certificate of Deposit’ Category

Question: Interest Rate Calculation?

How do you calculate the interest on Certificate Of Deposit?
for example if you but a cd for $1000 at interest rate of 3.45% how much will it be? thank alot!

Answer: CDs use a compounding method that is called “Actual/360.” This means that they compound daily (using the actual number of days) at a daily rate equal to the interest rate divided by 360.

To calculate the terminal value, use the following formula:

FV = PV * (1+R/360)^N

Where

FV = Future Value
PV = Present Value
R = annual nominal interest rate
N = number of days invested.

So — if you put $1000 in a CD last December 31 for a year, then when it matures it will be worth:

1000 * (1+0.0345/360)^366 = $1,035.70

In a non leap year, the amount would be ten cents less.

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Question: How much will I pay in Tax & Penalty on a IRA CD?

I have a Individual Retirement Account Certificate Of Deposit at a bank , I’m 54 years old , the total account value on the last statement I recieved is $22,195.27 , I asked the branch manager what the tax and penalty would be and she gave me the jerk around with no answer , I applied for a $13000.00 personal loan using the IRA CD for colateral and she said the IRA can not be used for colateral , so I’m thinking about cashing it in and paying the tax and penalty…Thanks! for your answers in advance…

Answer: The penalty will be $1300 (10%). You will also pay income tax on the early distribution. That amount will depend on your tax bracket. 15%, 25%…………….and if you are single married filing joint head of household or married filing separate.

Check the link below

http://www.irs.gov/pub/irs-pdf/i5329.pdf

You can also get an estimate on the link below

http://hrblock.com/taxes/tax_calculators/index.html

Christine EA Master Tax Advisor

This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided.

http://www.hrblock.com/tax_professionals/christine_wilkins.html

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Question: What are the tax rates for a CD (Certificate Of Deposit) versus tax on interest gained on a savings account?

And what is that rate(s)?

Answer: tax rates are the same. The interest rate you get depends on the bank that is holding your money. Some pay a lot more than others. It also depends on the length of the CD…. I know that PayPal, which is not a bank at all, but a Money Market, pays toward the top end. You can search for high paying banks on line. The tax rate depends on how much other money you are earning. It is impossible to say hwat you rate is without a lot more information.

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