how much interest will i get with 3k

Reaper

Anddos wrote: »

when someone said you can add more next year , i thought they ment like you can add more than 5340, if i fill it to 5340 this year how much interest am likely to get, i am thinking around 150 pound if its 4.5% interest, so when i fill it the next year the interest will double right to 300

IF you had put £5340 in at the very start of the year and IF you got 4.5% on it throughout the year you would get about £240 interest
BUT you are not filling it up at the start of the year so it has less time to grow so you will not get that much. Also by the sounds of it you don't actually know what the interest rate you are getting is.

is there no limit set to how much interest can get added right?

There is no limit on how much you have in your ISA (just how much you add each year) and there is no limit on how much interest you can earn on it.

Anddos

thanks, will the interest double every year as long as i make the 5k maximum each time?

Reaper

Anddos wrote: »

thanks, will the interest double every year as long as i make the 5k maximum each time?

I take it maths isn't your best subject. In theory if everything stayed the same and you added the maximum at the start of every tax year the interest would increase by an extra £240 each year, but that's not the same as it doubling every year.

Anddos

why would it stay at 240 tho, there will be another 5.3k added to it for the second year

beecher2

Anddos wrote: »

why would it stay at 240 tho, there will be another 5.3k added to it for the second year

The interest paid would go up by an additonal £240 each year, ie £240 interest in year one, £480 interest in year two, £720 interest in year 3, etc. So not doubling every year.

Anddos

oh i see now , so with 20k in there i could get 1k interest?

beecher2

Anddos wrote: »

oh i see now , so with 20k in there i could get 1k interest?

IF your rate is 4.5% and you kept 20k in for a year, then you'd get £900. 4.5 divided by 100 times 20,000.

Reaper

Anddos wrote: »

oh i see now , so with 20k in there i could get 1k interest?

Roughly. Here is how you calculate the interest payments on an account that does not pay tax such as an ISA.

Grab a calculator and type in the amount you have at the start of the year: £20000
Multiply it by the interest rate: 4.5
And finally divide by 100

It comes out at £900

By the way if you leave the interest they add to the account there for another year that will also earn interest i.e. you are paid interest on the interest. This effect is known as compounding and means it will grow a bit faster than you expect.

Anddos

is 900 pound worth it tho after 4 years?,its free money yes but i thought it would be more

Reaper

Here are the precise figures including compounding if you were to add £5340 at the start of each tax year and get 4.5% interest each year.

End of year 1: £5580.30
End of year 2: £11171.41
End of year 3: £17014.13
End of year 4: £23119.76

So you put in a total of £21360 and end up with £23119.76
That's a grand total of £1759.76 profit over the 4 years.