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Monthly or Annual Interest on Savings?
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Example for £1,000 saved:MasterandPuppet wrote: »Yea I need to have a clear up, I've got several with £1 in too!
I see now that there is very little choice to be made in any case. Although opinions4u comment has confused me!
As it turns out, having read some of the Ts&Cs for the account, Santander will only link to an outside current account using annual interest anyway. Still, it has been interesting to find out a little more about how this works; thanks again all.
Annual Gross 4.00%, net 3.20%, AER 4.00%
A basic rate taxpayer will receive £32.00 interest.
A non taxpayer will receive £40.00 interest.
Monthly Gross 3.93%, net 3.14%, AER 4.00%
A basic rate taxpayer will receive £31.90 interest assuming it is capitalised each month.
A non taxpayer will receive £40.02 interest (assuming the there is nothing hidden after the second decimal point of the gross rate).
The compounding effect of the lower net rate (when compared to the gross contractual rate) is less favorable.0
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