1. What is the Bank Interest Calculator?

This calculator computes monthly interest earnings for salary-based bank accounts in the Philippines using the principal balance and annual interest rate.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( P \) — Principal balance in PHP
• \( R \) — Monthly interest rate (annual rate / 12)
• \( I \) — Monthly interest earned in PHP

Explanation: The formula calculates the monthly interest by multiplying the principal balance by the monthly interest rate (annual rate divided by 12).

3. Importance of Interest Calculation

Details: Understanding how much interest your savings earn helps in financial planning and comparing different bank account options.

4. Using the Calculator

Tips: Enter your current account balance in PHP and the annual interest rate offered by your bank. The calculator will show your estimated monthly interest earnings.

5. Frequently Asked Questions (FAQ)

Q1: Is this calculator specific to Philippine banks?
A: Yes, it's designed for peso-denominated salary accounts in the Philippines, though the formula works universally.

Q2: Do banks compound interest monthly?
A: Most Philippine banks compound interest monthly for savings accounts, but check with your specific bank.

Q3: Are there taxes on interest earnings?
A: In the Philippines, interest income is subject to 20% final withholding tax for local currency deposits.

Q4: Why is my actual interest slightly different?
A: Banks may use daily balances or have different compounding methods. This calculator provides an estimate.

Q5: What's a good interest rate for PHP savings?
A: As of 2023, typical rates range from 0.1% to 1% annually for regular savings accounts.