Monthly interest decreasing on an increasing balance?

apple1976

Hi,

I have a first direct eSavings account, interest rate 4.75% AER (as far as I'm aware the rate has been the same all the time I have held the account).

I started with £4000 in the account and I haven't made any withdrawals or deposits, it just sits there earning interest. I'm puzzled as the monthly interest amounts don't make any sense to me - they have been:

£11.80, 12.90, 13.38, 13.42, 12.16, 13.51, 12.84 in chronological order.

Why do they decrease when the rate stays the same and the amount in the account is increasing (albeit very slowly)? I know these are trivial amounts, it's just what's going on which puzzles me.

thanks for any help!

dunstonh

days in the month ranging from 28 to 31. Interest payment date falling on a weekend so cannot be paid until next working day (or day earlier)

Milarky

If could simply be because they pay interest based on the days in the month (so only 30 in April but 31 days in March) plus the fact that the rate did drop - from 5% to 4.75% (not sure of the exact date it took effect) in the last month. Compared to the previous month therefore you were earning at a lower rate for fewer days - hence less interest.

apple1976

Milarky wrote:

If could simply be because they pay interest based on the days in the month (so only 30 in April but 31 days in March) plus the fact that the rate did drop - from 5% to 4.75% (not sure of the exact date it took effect) in the last month. Compared to the previous month therefore you were earning at a lower rate for fewer days - hence less interest.

right thanks. are they meant to tell me if the rate changes? i thought it was 4.75 when i took it out.

Debt_Free_Chick

apple1976 wrote:

right thanks. are they meant to tell me if the rate changes? i thought it was 4.75 when i took it out.

The T&Cs for the eSavings account refer you back to the T&Cs for your main account ...

8.4 We will tell you about interest rate changes within 30 days of the change by writing to you (which includes statement messages, and if you have registered for our internet banking service and you have agreed, secure e-message or email). We recommend that
you print or save copies of electronic notifications for your records.

Looks like it's still 4.75%

HTH

apple1976

cheers for the help!

meanmachine_2

Let me take a wild guess here...

12.16 - February (28days)
13.51 - March (31days)
12.84 - April (30 days)

Do I win a banana?