EARNING INTEREST

Dominion, Volume 30, Issue 114, 8 February 1937, Page 14

EARNING INTEREST

Growth of Post Office Deposits

Interest placed to the credit of Post Office Savings Bank depositors last year amounted to £1.406,459. This large total was added to the individual accounts on March 31, thus becoming principal and beginning to earn interest.

How money grows at compound interest has been the subject of many interesting calculations, and taking the interest rates of the New Zealand Post Office Savings Bank throughout the years, it is found that a sum of £3OO deposited in 18S4 reached £1447 in 1932. The sum of £1 deposited quarterly on present rates of interest (3 per cent, up to £5OO, and 2-J per cent, over £5OO and up to £2000) would, in 30 years reach £193, of which the deposits would have been £l2O and the interest addition £73, while the same process repeated for 40 years would involve deposits totalling £l6O and interest £146, bringing the credit balance at the end of that period up to £306. Savings-bank accounts are not centralised in Wellington, for there are 40 offices distributed throughout New Zealand where the ledger cards of depositors are maintained, enabling withdrawals to be facilitated, as the money banked is available at these ledger offices on call upon reference to the ledger account showing the current credit. About 850,000 accounts are kept open in this way, and interest, although not actually added to the depositor’s passbook until the end of the financial year, is calculated monthly on each complete £1 at credit for the full month.