Mini ISA?

edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings
1 reply 1.2K views
chrislee765chrislee765 Forumite
380 Posts
edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings
Hello,
Im not very finacially literate.
I'm thinking about opening a mini ISA and putting £3000 in it straight away.
First what does "on maturity" mean?

Also if they say they pay 5.4% annually does that mean each year i get £162 for each year the money is in the account?

Kind Regards
Chris Lee

Find a job you love and you'll never work a day in your life.

Replies

  • isasmurfisasmurf Forumite
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    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
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    Is the ISA you are thinking of a fixed period ISA, as this is usually where you will find the phrase "on maturity". Maturity means at the end of the fixed period. For example maturity of a 5 year fixed rate ISA will be after 5 years.

    An interest rate of 5.4% on £3000 does mean you get £162 in the first 12 months, but not for each year in the account. The second year, providing you don't withdraw anything, you will get 5.4% on £3000+£162, so £170.75. The third year, if you still don't withdraw anything, you get 5.4% on £3000+162+170.75 and so on.

    Some fixed rate ISAs are funny in that they will only pay the interest "on maturity", i.e. at the end of the fixed rate period. You will need to check to see if this is the case, and if it is whether they will still compound the interest - that is calculate your interest at the end of the each year as if it had been paid.
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