Halifax ISA Saver 4 years - compound interest?

juliasavestheworld

Good morning,

I've moved my variable rate ISA from NS&I to Halifax in April 2008.
Well, I'm not sure know whether this was a good idea because I've
chosen a fixed rate Halifax ISA Saver for 4 years. The interest
is 6.2%. Now, here is the big question: in the terms and conditions
it is said that

Tax-free interest paid on maturity.

First, I was expecting that the interest would be paid each year
on the anniversary of the account. But anyway, most important is
for me to know whether I can expect compound interest?!

My investment is £3000. With compound interest I would obtain
£3816.10 after 4 years and without compound interest just
£3744.

Does anyone know about the compound interest with long term
Halifax ISA Savers?

Answers are much appreciated!

RayWolfe

Yes the interest is compounded.
All Halifax fixed rate savings have this unusual approach to payment of interest but my actual experience is that the interest is compound. For ISAs you get an annual statement of interest earned to date.

Milarky

It should say '6.2% AER' - that ensures annual compunding applies

juliasavestheworld

Milarky wrote: »

It should say '6.2% AER' - that ensures annual compunding applies

Thank you so far. It is saying

Fixed rate 6.20% Gross p.a.

in the account details.I know that "p.a." stands for "per annum" which means per year.
So the question is then AER = Gross p.a.?

strawberrylane

The interest on these Halifax accounts is definitely compounded. I had similar concerns when I first took one out. But I now have several (some 2 and 3 years old and another that has matured after 4 years) and can confirm that you will receive a statement at each anniversary confirming the interest that has accrued and you will see at year 2 onwards (a long time to wait I know) that it is compounded. So, hopefully you can relax and not worry any more about this. It is compounded!!

See this thread for more confirmation (I posted a calculation in this thread - quite a way down):
http://forums.moneysavingexpert.com/showthread.html?t=358021

Lokolo

juliasavestheworld wrote: »

Thank you so far. It is saying
in the account details.I know that "p.a." stands for "per annum" which means per year.
So the question is then AER = Gross p.a.?

AER = annual equivalent rate

Its the rate you get per year calculated.

juliasavestheworld

strawberrylane wrote: »

See this thread for more confirmation (I posted a calculation in this thread - quite a way down):
http://forums.moneysavingexpert.com/showthread.html?t=358021

Thank you very much for the helpful link. It's kind of a relief now. However, I'm going to write to Halifax to get written confirmation from them.

RayWolfe

Well, that makes all our advice really worthwhile.