ISA's interest

tonymaclennan

Hello,

What am I missing here.

HSBC offer around 5% payable monthly on their e-ISA services. So on a £3000 balance over 24 months with £3600 (£150/month * 24) you would have £6600.
Atleast this is the way a friend told me. Although I thought the interest was paid anually, therefore just £150 for the year paid at approximately £12.50 added each month.

How does it work?

Thanks

agsnu

tonymaclennan wrote: »

HSBC offer around 5% payable monthly on their e-ISA services. So on a £3000 balance over 24 months with £3600 (£150/month * 24) you would have £6600.
Atleast this is the way a friend told me. Although I thought the interest was paid anually, therefore just £150 for the year paid at approximately £12.50 added each month.

How does it work?

Your friend is off his/her rocker. The annual interest rate on the e-ISA is 5.75%, meaning that after a year you will have 5.75% more in your account. If you put £3600 in your account today, you will have £3807 in your account after a year (assuming the interest rate stays the same - it is variable and may very well go down). The interest is just paid monthly - so you'll get it paid in smaller amounts, but when all these are added up together it's equivalent to an annual interest rate of 5.75%

To achieve the returns you're quoting, the interest rate would have to be about 50%. Which is ridiculous and not going to happen.

tonymaclennan

haha.

Just as I thought! Thanks for that clarification!