Isa ignorance :s

B.pisl

I've never had an ISA before, in fact I've always been very bad at looking after my savings. I'm much more responsible now than I have been in the past with money, but I'm still learning.

My question is; If I open an ISA asap (10 days before the new tax year) and deposit around £2000 in it, will I receive any interest? I'm guessing no, because that sounds too much like cheating, but I thought there's no harm in checking...

Lokolo_2

B.pisl wrote: »

I've never had an ISA before, in fact I've always been very bad at looking after my savings. I'm much more responsible now than I have been in the past with money, but I'm still learning.

My question is; If I open an ISA asap (10 days before the new tax year) and deposit around £2000 in it, will I receive any interest? I'm guessing no, because that sounds too much like cheating, but I thought there's no harm in checking...

You would earn interest for the number of days the £2k has been in the account, this is pro-rata to the AER of the account. Since most accounts only pay after 1 year, you may not get interest until a year after you opened the ISA anyway.

However a good reason to open an ISA now is to make use of this year's annual Cash ISA allowance so that you can still use your full allowance next year too :j

blueberrypie

Like any savings account, you only earn interest for the time your money actually spent in the account - the bank doesn't just look at the balance on a particular day and calculate the interest based on that. So if you had £2000 in an account paying 3% interest, and it was there for 10 days, you'd receive £2000 x 3% x 10/365 (about £1.64). If you had the same amount in the same account for a full year, you'd receive £60. When the interest would be paid depends on the terms of the account - some pay on a specific date, some pay on the anniversary of the account.