Q: I just received my military service deposit amount plus accrued interest on my military time. The deposit amount for my service from August 1968 to August 1972 was $896, with $3,330.43 in accrued interest, for a total of $4,226.43. The accrued interest seems awfully high. The interest accrual history runs from October 1986 ($103.88) to October 2009 ($166.22).
A: I can’t tell whether the final number you got is correct. What I can tell you is that annual interest rates have been high after Dec. 31, 1984. Before that, they were a flat 3 percent. After that, market rates were applied. For example, the 1985 rate was 13 percent; 1986, 11.125 percent; 1987, 9 percent; 1988, 8.375 percent; 1989, 9.125 percent. And so on. In fact, the smallest amount of interest to be assessed is in 2010, at 3.125 percent. When you realize that interest is compounded, year after year, it’s easy to see why the final number balloons the longer you wait to make a deposit.
