Yearly or Monthly Intrest Question...

Captain_Hogan

I've been looking at getting an ICAS to put the money I'm saving up for a holiday next year, and will be withdrawing the money next summer, say about 10-11 months from now, I was looking to go for monthly interest because of that reason.

I look at Barclay ICSA via MoneySuperMarket and read this:

'Interest is calculated on daily statement balances and credited to the account annually.'

Does this mean that if I withdraw the money before the payout that I will still get the 200 quid odd interest payed in at the end of the year? Or would that mean that if I take the money out before the yearly interest payout then I'd lose the interest payment?

Also I'd been looking for monthly interest payments for this reason and ignoring some of the slightly better offers on yearly payouts. The fact I have to wait a year for the 200 quid is fine as long as I actually get it. So is this the norm for other yearly interest accounts.

Sorry if this is a bit of a stupid question


Ian.

Edit: One more question. I've noticed a lot of banks are offering 1 year introductory rates. As I have the choice bettween one at 6.25% (5.25 after a year) and 5.85% with no bonus.

My question is would moving money from one ICSA to another count under your yearly quota? If I took the short term offer with the intention of moving on to the better one when the year is up, would this eat into the 3,600 quota for that year?

isofa

You always get the interest regardless when you withdraw some funds (provided the account isn't a term or "bond" account with withdrawal restrictions), obviously you don't get interest paid on the funds after they are withdrawn.

Interest is calculated daily - on the actual balance each day. With an annual rate, it is paid at the end of a set 12 month term (but still calculated daily on the balance), with monthly, it's paid monthly.

Paul_Herring

Captain_Hogan wrote: »

Does this mean that if I withdraw the money before the payout that I will still get the 200 quid odd interest payed in at the end of the year? Or would that mean that if I take the money out before the yearly interest payout then I'd lose the interest payment?

Somewhere in between The interest you'll get will be pro-rataed for the length of time it was in there.

For example, if you calculate that you'd get £200 if you held for the full year, but you withdrew in 9 months you'd get £150 (200 * 9/12) when the interest would be due. (Earlier if you closed the account - it wouldn't affect how much you'd get, just when you'd get it.)

Also I'd been looking for monthly interest payments for this reason and ignoring some of the slightly better offers on yearly payouts. The fact I have to wait a year for the 200 quid is fine as long as I actually get it. So is this the norm for other yearly interest accounts.

Yes. The only differences between monthly and yearly interest (assuming you keep the interest in the account, and you're a basic rate tax payer) is when you receive the interest, and about 27p per year per £1000 held in a 6% account.