How interests are calculated??

Let's say my bank balance is $100 debit at the beginning of the month, then it goes up to $500 in the middle of the month, then it goes down to $50 at the end of the month.

If interest is calculated at the end of the month at 1% per month

What is the interest?

Is it $50 X 0.01 = $0.5 (based on amount owning at the point of calculation)

Or is it $500 X 0.01 = $5 (based on the highest amount owning during in that period)

Source: http://www.woodworkforums.com/f43/how-interests-calculated-139727/

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