Practical Money Skills - For Consumers

With this type of account, money that stays untouched earns interest. The amount of interest offered varies, depending on the bank and type of account you choose, and interest rates in general.

Interest is calculated in one of three ways: daily, monthly or every six months. The bank pays interest to accounts either once a month or once every six months.

Because of these variables, and other factors, the amount you earn on your savings can fluctuate.

Factors that determine the dollar yield on an account:

Current interest rates

How interest is calculated on an account (ie daily, monthly or every six months)

When interest is paid on an account (either once a month or once every six months)

The following factors reduce money earned and can even turn it into a loss

Fees, charges and penalties. These are usually based on minimum balance requirements or transaction fees.

The maintenance of a certain balance in the account. Many accounts don't pay any interest at all unless a certain minimum balance is achieved and maintained for a set period of time. Generally speaking, the higher the balance, the higher the rate earned.