Annual or Monthly interest?

victor62

Can anyone tell me which is best :- Annually paid interest on Fixed rate Cash Isas @3.5% or Monthly paid interest @3.4%(which obviously gets compounded)or do they amount to much the same thing?

Regards Vic.

Paul_Herring

victor62 wrote: »

Can anyone tell me which is best :- Annually paid interest on Fixed rate Cash Isas @3.5% or Monthly paid interest @3.4%(which obviously gets compounded)or do they amount to much the same thing?

The monthly option is about 54p better per £1,000 due to rounding - assuming they round off, instead of rounding down to the nearest penny each month.

Mr.Mulla

Compare the quoted APRs for the accounts then that will tell you which is better, regardless of the frequency of interest payments, as it will take into account the effect of compounding the interest if appropriate (ie on the monthly paid one).

alastair_h

Mr.Mulla wrote: »

Compare the quoted APRs for the accounts then that will tell you which is better, regardless of the frequency of interest payments, as it will take into account the effect of compounding the interest if appropriate (ie on the monthly paid one).

In my experience you usually get a few pence more on monthly versus annual due to rounding errors, it's nice seeing it grow rather than just sitting there IMO anyway. The annual and monthly do take into account monthly compounding hence why they are different - they should equate, however findings as above.

Nine_Lives

Oh D'oh me. I always thought Annual was better & could never work out why there was a monthly option on some as it was always "less %". lol