To determine if it is worth transferring your money to the new bank, we need to compare the difference in interest rates and calculate the amount of additional interest earned.
Let's assume you have an initial amount of $10,000 in the bank.
Step 1: Calculate the interest earned in your current bank:
Interest earned = Initial amount * Interest rate
Interest earned = $10,000 * 0.02% = $2
Step 2: Calculate the interest earned in the new bank:
Interest earned at the new bank = Initial amount * (Interest rate + 0.02%)
Interest earned at the new bank = $10,000 * (0.02% + 0.02%)
Interest earned at the new bank = $10,000 * 0.04% = $4
Step 3: Calculate the difference in interest earned between the two banks:
Difference in interest = Interest earned at the new bank - Interest earned at the current bank
Difference in interest = $4 - $2 = $2
Based on these calculations, transferring your money to the new bank would result in an additional $2 of interest earned.
The next step is to determine the dollar amount that would make this transfer worth it. This depends on various factors such as the amount of money you have, how long you plan to keep it in the bank, and your personal financial goals.
Let's assume you determine that a $50 difference in interest earned would make the transfer worth it. We can calculate the initial amount required to achieve this:
50 = Initial amount * (0.02% + 0.02%)
50 = Initial amount * 0.04%
Initial amount = 50 / 0.04% = $125,000
Therefore, if you have $125,000 in your account, transferring it to the new bank with a 0.02% higher interest rate would be worth it based on your specified criteria.
Suppose you find another bank with an interest rate that is 0.02% higher than
the bank you are currently using. Is it worth it to transfer your money into this
new bank? What dollar amount might make this transfer worth it? Show the
calculations you used to justify your answer
1 answer
1 answer