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You are watching: Why do banks pay their customers interest on the money in their savings accounts


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The interemainder price is the amount lenders charge borrowers and also is a portion of the primary. It is also the amount earned from deposit accounts.
Discrete compounding describes the strategy by which interemainder is calculated and added to the primary at certain set points in time.
The annual percent yield (APY) is the reliable rate of rerotate on an investment for one year taking right into account the impact of compounding interest.
Annual Percentage Rate (APR) is the interest charged for borrowing that represents the actual yat an early stage expense of the loan, expressed as a portion.
The yearly tantamount rate (AER) is the interest rate for a savings account or investment product that has even more than one compounding duration.

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An automatic reinvestment setup is a common fund setup that instantly reinvests resources gains earlier right into the fund.