Monthly vs Annual Interest

Jumanji79 · 7 May 2013 at 1:41PM

Hi

I am thinking about opening up another Cash ISA.
I will be adding to it monthly with whatever is left over from my monthly pay (!)
What is the best cash isa to get? with a monthly or annual interest?

CLAPTON · 7 May 2013 at 1:54PM

interest is earned on a daily basis and then added either monthly yearly or whatever.

The important figure is the EAR which takes into account compound interest where necessary

psychic_teabag · 7 May 2013 at 3:30PM

Annual or monthly interest makes very little difference. There is a very small effect, which means that for money in the account for less than a year, for the same EAR, annual interest is very slightly better.

You could consider a regular saver account - there are some ISA ones around, but it's possible that a non-ISA would pay more, even after tax is deducted. (Depends on your tax rate, of course). But regular saver accounts (ISA or otherwise) can be stricter about how much you pay in - might not be for you if the amount is very unpredictable.

thenudeone · 7 May 2013 at 8:30PM

I wouldn't normally open a regular saver ISA in any month except April.

They usually require 12 monthly payments which means you will be more or less forced to use next year's ISA allowance with them (or suffer penalties). But check the terms carefully - you may be okay stopping payments next March.

Monthly vs Annual Interest

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