Alex is incorrect. A 1% interest rate is based on an annual rate, not a monthly rate. If interest was paid monthly, then you would divide 1% by 12 (months), and compute the interest. His answer suggests a 12% annual return ... that is $100 at the start and $112 (or a bit more) at the end ... and savings accounts do not pay 12%.
Savings account are really not worth these days other than to ensure you don't lose money. A money market account would be a bit better, or a mutual fund where the return is generally better if you pick the right fund. Check Morningstar.com for mutual funds.
Every bank is different so you'll have to ask when you go in to apply, but you'll be lucky if you get more that .25% interest (annually). Yes, you can take your money in and out whenever you want, but there may be a minimum required to keep the account open. Keep in mind that if you keep taking it out, you won't earn any interest (not that it pays much anyway).
Interest is accrued monthly.
Suppose you put $100 in the bank on Jan. 1 with an interest rate of 1%.
On Feb. 1st you'd have $101 upon which you'll earn 1% interest.
On March 1 you'll have $102.01. This is called compounding interest.
In case you're wondering, .17% APR is the average savings account interest rate in the U.S.
keep your $$ at home or open a free checking account - savings accounts now earn LESS than one % !!!!
About nothing.
