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Banks don't consider our account balance on the last working day of a month for calculating interest, rather what matters to them is This formula will give you Amount you will have after completion of 1 year.

When banks calculate interest they replace Principal (P) with the Average Daily Available Balance (ADAB) so the formula becomes: The technique is to calculate contribution of an individual account balance towards the months average balance, sum all such contributed balances and divide the sum by number of days in that month.

For normal savings accounts this term is typically 1 month, making them to pay interest at the end of every 30 or 31 days period.

It is common sense that the more money we have in our accounts the more interest we will get but this is not it.

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Well it turns out that owing to the transactions made as shown above, the account balance never exceeded 0 for 21 days (07/01/09 through 07/21/09) resulting in a lower average balance..

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