City-Data Forum Please explain what this percentage means?
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06-26-2019, 07:29 PM
 830 posts, read 295,336 times Reputation: 341

If a bank offers 0.02%, what does that mean? Say I have \$5 in the bank, what is 0.02% of that?

06-26-2019, 07:33 PM
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0.10

06-26-2019, 08:09 PM
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Actually if it’s really 0.02% that would be 1/10th of a cent.

06-27-2019, 04:38 AM
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Quote:
 Originally Posted by Cindi Waters If a bank offers 0.02%, what does that mean? Say I have \$5 in the bank, what is 0.02% of that?

It's two one hundredths of one percent. It can be a little confusing because it's percentage with decimal value. To get the percentage of number you multiply the number times the percentage but first you move the decimal point to the left two numbers. If it was 2% you could also show it as 2.0% percent.

5 * .02 = .1 or ten cents

For 0.02%

5 * .0002 = 0.001 or one tenth of a penny.

06-27-2019, 04:47 AM
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That reminds me of this video.

06-27-2019, 11:29 AM
 Location: Kentucky 505 posts, read 304,728 times Reputation: 2158

06-27-2019, 11:53 AM
 Location: Aurora Denveralis 8,556 posts, read 3,001,676 times Reputation: 12760

For one thing, "a bank offering 0.02%" means it's an interest rate, and the return can't be calculated without knowing the rate period - daily, most likely, but it could be monthly.

Also, 0.02% does not mean "x 0.02," but one hundredth of that rate. It would be 0.1 cents per period on five bucks, and gains would probably be lost to rounding/minimum accrual at that level.

\$500 would gain 10 cents a day, probably credited monthly, or about \$3 for a month.

06-28-2019, 05:28 PM
 8,815 posts, read 5,119,154 times Reputation: 10085
Quote:
 Originally Posted by Quietude Neither the right question was asked nor were the answers useful. For one thing, "a bank offering 0.02%" means it's an interest rate, and the return can't be calculated without knowing the rate period - daily, most likely, but it could be monthly. Also, 0.02% does not mean "x 0.02," but one hundredth of that rate. It would be 0.1 cents per period on five bucks, and gains would probably be lost to rounding/minimum accrual at that level. \$500 would gain 10 cents a day, probably credited monthly, or about \$3 for a month.
That would mean \$500 earns \$36 of interest in one year, which (ignoring compounding) is 7.2%.

Banks quote annual interest rates, not daily interest rates.

\$500 earning .02% APR = \$0.10 interest per year. Sadly, this is more or less what brick and mortar banks have been paying for some time now.

06-28-2019, 09:34 PM
 830 posts, read 295,336 times Reputation: 341
Quote:
 Originally Posted by thecoalman It's two one hundredths of one percent. It can be a little confusing because it's percentage with decimal value. To get the percentage of number you multiply the number times the percentage but first you move the decimal point to the left two numbers. If it was 2% you could also show it as 2.0% percent. 5 * .02 = .1 or ten cents For 0.02% 5 * .0002 = 0.001 or one tenth of a penny.
OK, and I'm reading this again, because I guess (?) I forgot. So, yes, it is confusing for me because as you say, it's percentage with a decimal value. And when I went to school 2% was written as .02. Not, I suppose, as .02%. Still can't figure it. So 2% means 2% of something. So is 2% written as .02, but not .02%??? Or is it more precisely written as 0.02% in that case where it is not really 2%? I guess that is where my confusion is. If someone else has already answered the question, please excuse but maybe you can help out by answering it or pointing to the answer. Thanks.

06-28-2019, 09:36 PM
 830 posts, read 295,336 times Reputation: 341
Quote:
 Originally Posted by Petunia 100 That would mean \$500 earns \$36 of interest in one year, which (ignoring compounding) is 7.2%. Banks quote annual interest rates, not daily interest rates. \$500 earning .02% APR = \$0.10 interest per year. Sadly, this is more or less what brick and mortar banks have been paying for some time now.
I see that. Thanks.
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