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Monthly vs Annual Interest
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# 1
Jumanji79
Old 07-05-2013, 1:41 PM
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Join Date: May 2013
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Default Monthly vs Annual Interest

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?
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# 2
CLAPTON
Old 07-05-2013, 1:54 PM
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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
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# 3
psychic teabag
Old 07-05-2013, 3:30 PM
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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.
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# 4
thenudeone
Old 07-05-2013, 8:30 PM
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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.
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