working out how much interest, help please?

whattodo02

Its probably really simple, but just wondered if anyone can tell me, £20,000 in savings with a 3% annual interest, interest is going to be paid monthly, so can anyone tell me how much interest i will get per month please?

opinions4u

£20,000 at 3% a year = £600. Minus 20% tax = £480. Divided by 12 = £40 a month.

It will vary slightly each month as there are a different number of days in each month. So if you take the £480, divide by 366 and multiple by the number of days in the bank's accounting period for the month you should get a more precise answer.

Rafter

Also depends what you do with the interest. If you leave the money in the account you will earn the total amount calculation by opinions4u.

The monthly interest you receive will be 1.03^(1/12) = 0.2466% = £49.32 gross = £39.36 net. If you withdraw this interest or get it paid to another account you will earn £473 over the year. If you leave the interest in the account you will earn interest on your interest through the miracle of compounding and earn the full £480 net (£600 gross) outlined above!

Good luck

R.

opinions4u

Rafter wrote: »

Also depends what you do with the interest. If you leave the money in the account you will earn the total amount calculation by opinions4u.

The monthly interest you receive will be 1.03^(1/12) = 0.2466% = £49.32 gross = £39.36 net. If you withdraw this interest or get it paid to another account you will earn £473 over the year. If you leave the interest in the account you will earn interest on your interest through the miracle of compounding and earn the full £480 net (£600 gross) outlined above!

Good luck

R.

Yup, if the gross rate is 3.00% and the AER 3.04% my numbers are right.

But if the gross is 2.97% with an AER of 3.00% you'll get slightly less than my figures.

Always calculate actual returns from the gross rate (not the AER).

SailorSam

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