Savings Account With Interest Calculated Daily

amyandoli

Hello!

I have a £5k lump sum, and £650 a month which I want to save for a short, undetermined amount of time, a maximum of 5 months.

After this time, the money will go towards a mortgage deposit.

If I find an account which calculates interest daily, will I make the money increase more than a monthly/yearly interest?

I have a current account with the Co-op, a mini-cash ISA with Brittannia from last year with £3k in and a bank-book savings account with less than £50 in with Brittannia also (which my grandparents set up for me and put birthday etc money in.)

Thank-you!

Creditcardkid

Hi, I think you are getting confused between when the interest is paid rather than calculated.

For example, if an account pays interest yearly (as my ISA does) then they calculate interest daily and pay it yearly. I also have an account that pays monthly and works the same way.

Hope that makes sense (I don't think I have explained it that well to be honest)

Steve

amyandoli

So even if the money is stored short term, I'll get interest?

Creditcardkid

Yes you will. The only case in which is won't happen is if you use an account which states in the T & C that if you take out the money then no interest is paid (Fixed terms mainly).

ING Direct, Cahoot (4.5%, 4.55%) both work this way pay monthly and calculate daily.

There are a few others with slightly higher rates of interest but I have not used them so cannot recommend them from personal usage.

You could also open an ISA (Bradford and Bingley, who I am moving to at the moment pay 5% on amounts over 5%. They calculate interest daily, pay monthly and have no penalties or loss of interest for any withdrawls).

Hope that is of some help.

Steve

amyandoli

That's great, thank-you!

Creditcardkid

Glad to help :money: