Halifax High Interest Current Account

iram293

Hi all,

I wonder if anyone could help me understanding the interest rate on this account.

This account gives 5.12% AER on a balance of £2,500 as long as I pay in more than £1000 each month - which I do. I have over £2,500 in the account and received interest last month of £2.88. I am told this is 5% on the £2,500 after deducting tax. Is this correct? I don’t understand how it is worked out and would appreciate any help. Is it 5% once, for the whole year or 5% a month?

Thanks in advance..

Baldur

The interest rate is quote as AER (ANNUAL Equivalent Rate), i.e. the rate per year.

p1an0player

5% per year

so £125 gross per year if the balance is £2,500

jennifernil

It is 5% per annum. If you had at least £2500 in the account for a whole calendar month I would say you should have got about £8.33 after tax.

£2500 x 0.05 = £125 £125 / 12 = £10.42

£10.42 x 0.8 = £8.33

You get virtually no interest on anything over £2500, so bad idea to have more than that in it.

We have the same account.

iram293

Thanks Jennifer. The reason I was confused is that I telephoned Halifax and they said I should still get 5% on the £2,500 and 0.10% for anything over that. So if I go by this I did not get the £8.33 either, only got £2.88?

johnmoney05

iram293 wrote: »

Thanks Jennifer. The reason I was confused is that I telephoned Halifax and they said I should still get 5% on the £2,500 and 0.10% for anything over that. So if I go by this I did not get the £8.33 either, only got £2.88?

If you had £2500 balance over the whole month, then they gave you the wrong interest.

opinions4u

Did it have over £2,500 in it for the full month?

When did it become a High Interest Current Account?

If the answers to this don't explain it, you need to call them and ask for a clear explanation.

Baldur

iram293 wrote: »

Thanks Jennifer. The reason I was confused is that I telephoned Halifax and they said I should still get 5% on the £2,500 and 0.10% for anything over that. So if I go by this I did not get the £8.33 either, only got £2.88?

The £2.88 suggests that you only received interest for 10.5/11 days of the month at a very rough calculation.

iram293

opinions4u wrote: »

Did it have over £2,500 in it for the full month?

When did it become a High Interest Current Account?

If the answers to this don't explain it, you need to call them and ask for a clear explanation.

I only opened the account in Sept 08. I did not have £2,500 for the whole month, maybe 10 days before interest was paid.

thanks

jennifernil

That would explain it then. The interest is calculated on the daily balance, though anything OVER £2500 is virtually disregarded.

You cannot just bump it up to £2500 at some point and expect to get a full month's interest.

And they do not average it over the month either. If you drop below £2500 at any point in a calendar month, you will not get the maximum possible of about £8.33 after tax (disregarding the miserable 0.1% on bigger amounts).

jennifernil

It is a good account if you use it properly. Be sure to always deposit the minimum £1000 per month. Do not keep over £2500 in it, open a websaver or similar and you can transfer instantly between the two.