Mothly Interest or Annual interest

[Dennis Boar]

How does annual interest on a saving account compare with monthly interest

[Loosehead]

Assuming you leave it in it is 12 * the month rate + compounding, ie (1+(n/100))**12 where n is the monthly % rate.

[stevie21]

I'm not even sure that this is what you're asking but over the course of the year, both amount to the same figure.

If the annual rate was 12% then �100 would grow to be �112.
If this was quoted as a monthly rate, it's not as simple as just dividing it by 12 as the interest would be compounded.
The *wrong* calculation (i.e. that monthly is 1%) is that after one month, �100 becomes �101. After 2, �102.01 (instead of just �102).
Loosehead's formula is probably right although I've not checked it out.