ISA Query

Jackjack21

Hi,

I would be grateful if anyone could provide some clarity on the following.

If I put £5,640.00 in my ISA account this year and Next year I put also another £5,640.00. Does that mean that I will earn interest on only £5,640.00 or £11,280.00?

Thank you,

Jack

trinidadone

if you put £5640.00 in a isa on 6th April 2012 you will get interest on this amount on 5th April 2012 (unless the ISA pays interest monthly)

ejv

trinidadone wrote: »

if you put £5640.00 in a isa on 6th April 2012 you will get interest on this amount on 5th April 2012 (unless the ISA pays interest monthly)

I think u meant 2013:)

Mikeyorks

Jackjack21 wrote: »

If I put £5,640.00 in my ISA account this year and Next year I put also another £5,640.00. Does that mean that I will earn interest on only £5,640.00 or £11,280.00?

You get interest added on to the £5640 after the 1st year. Then - the following year you get interest on ((£5640 + interest) + interest on £5640). In other words the interest starts to compound.

badger09

Jackjack21 wrote: »

Hi,

I would be grateful if anyone could provide some clarity on the following.

If I put £5,640.00 in my ISA account this year and Next year I put also another £5,640.00. Does that mean that I will earn interest on only £5,640.00 or £11,280.00?

Thank you,

Jack

Assuming you pay in on 6th April, and don't take any out -

you'll get interest on £5640 at the end of the 1st year (e.g 3.3% ISA £186.12)

if you put another £5640 in on 6th April 13, you'll get interest on £11466.12 (£11280 + £186.12.) If still at 3.3% would be £378.38 interest at the end of the 2nd year.

thenudeone

You will always earn interest on each penny in the account for each day it's in the account.

The interest isn't calculated on the balance at one single point in the year, even though some people think it is because it's usually added the the account just once a year.

Lansdowne

Most ISAs don't pay the interest after exactly one year, they pay on a fixed date set in the account rules. You're then paid for the proportion if the year involved. The annual interest of £186.12 is about 50p a day so you would get (for example) about £101 credited into your account if the payment day for that account happened to be 202 days after you opened it. Once you add your second £5640.00 the 50p a day becomes doubled for each day after it's added.