Alliance & Leicester ISA Interest Query

Innocent_Guy

Hi All,

Sorry if this is posted in the incorrect place

A friend of mine has an A&L Easy ISA which he opened 01/09/08. He paid £200 into the account upon opening. He next paid in £2000 which cleared into the account 29/12/08, prior to the interest cut of date which is 1st January.

Today he has subsequently checked the interest gained and can see a payment of £3.72 marked as "Gross Interest"

He has done his calculations and determined that this would be an interest rate of 0.17% on the £2200.

A&L have advised that he has a variable interest rate, which as of today is at 2% :mad::mad::mad:

Does anyone know where this 0.17% has come from as he is under the impression he should have recieved at LEAST 2%.

There have been NO withdrawals.........

Please advise if the above is correct or if there have been any other issue similar to this.

Regards

Innocent

Hungerdunger

Have you checked his figures?

Because I reckon he's got more than 2%, when you remember that he would have qualified for only 3 days of interest on the £2,000, which I calculate should earn him the grand sum of 33p!

Innocent_Guy

Here is a copy of activity

rb10

Your friend is getting, on average, 4.55%, as interest is calculated on the balance in the account daily. As the money wasn't in the account for the whole year, interest received is proportional to the amount of time that the money was actually in the account.

masonic

The interest can be broken down into:-

£2000 for 3 days (which is equivalent to interest on £200 for 30 days)
£200 for 122 days

So the interest your friend has been paid is equivalent to interest on £200 for 152 days, which gives an annualised rate of about 4.5%.

Edit: OR, you could look at it in terms of the average balance of the account between 1st Jan 2008 and 31st Dec 2008...

This would equal [(£2000 x 3 days)+(£200 x 122 days)]/365 days = £83.29
£3.72 interest on an average balance of £83.29 gives a rate of 4.5%.

Energize

I'm amazed at how many people think they can put money in a few days before interest is paid and think they will get the full years interest on it!

Innocent_Guy

Energize wrote: »

I'm amazed at how many people think they can put money in a few days before interest is paid and think they will get the full years interest on it!

No one asked for your comments........... Facts only please


Many Thanks to the above who actually helped!

Hungerdunger

Innocent_Guy wrote: »

No one asked for your comments........... Facts only please

If you post a question on a public forum, you can't complain when you get replies which you don't like. (As long as they're not abusive, defamatory etc)

And to be honest, if in fact you and your friend both thought he'd get a full year's interest on the £2,000 when it was only in the account for three days, then you were both being pretty naive.