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How SACCO savings interest is calculated

Members care about savings interest being fair; boards care about its cost. Both are served by a clear method applied the same way to everyone.

By the SaccoMonitor team · Updated · 7 min read

The two common methods

Daily balance

Interest for each day on that day’s closing balance: balance × annual rate ÷ 365, summed over the period.

Minimum balance

Interest on the lowest balance in the period, for every day of the period.

A worked example

A 30-day month, annual rate 10%. The member starts with 200,000, withdraws 150,000 on day 11, and deposits 250,000 on day 16:

DaysBalance (UGX)Balance × days
1–10 (10 days)200,0002,000,000
11–15 (5 days)50,000250,000
16–30 (15 days)300,0004,500,000
Total6,750,000
MethodCalculationInterest (UGX)
Daily balance6,750,000 × 10% ÷ 3651,849
Minimum balance50,000 × 30 × 10% ÷ 365411

How often to post interest

Interest can be posted monthly, quarterly, half-yearly or yearly. More frequent posting lets members see it sooner; less frequent posting means fewer entries. Whatever you choose, each account should be paid from the day after its last posting to the period end, so no day is paid twice or missed. A minimum balance below which no interest is earned keeps tiny accounts from costing more than they are worth.

SaccoMonitor applies these rules per product and shows a preview of every account before posting — see savings management.

Frequently asked questions

Daily interest = balance × annual rate ÷ 365. Adding it up for each day of the period gives the interest for the period.

Interest is paid on the lowest balance the account had during the period, for the whole period. It rewards members who keep money in and is simpler to explain, but pays less when balances move.

Yes. It is recorded as Dr Interest on members’ savings (expense) and Cr Members’ savings, which increases what the SACCO owes each member.

Related pages

Savings management in SaccoMonitor

Automatic interest by product.

Fixed deposits in SACCOs

Locked rates and interest at maturity.

Double-entry for SACCOs

How interest appears in the books.

See it working in SaccoMonitor

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