Question about ISA interest rate calculation

ladydeeurope

I have some questions about how the interest is calculated, and hope someone can explain this to me.



I opened a Direct ISA with Abbey in May this year, as BOE keeps dropping the rate; I have seen my ISA interest rate changed from 6% to, 4.5% and now 4%. My questions are:

• How does the bank calculate the interest rate as it has changed three times within the same tax year? In another word, will I still get my 6% interest until the day they change to 4%?
• I still have some allowance that needs to use up till April, in order to maximise my interests, what is the best way to do this? For instance, what difference is there if I put in all the remaining £2000 at once or by split payment?

Any advice is appreciated!

Thanks

dzug1

Interest is normally calculated daily (ie 1/365 of 6%, etc) and paid annually. So when the rate drops the daily interest accruing also drops.

If you put the remaining £2000 in at once it will earn interest at the current daily rate (whatever that may be) for the rest of the year. If you split it, you will get less interest as some of it will be there for fewer days.