Help/Advice needed: ISA confusion!

racheyb

Hello! My first post on MSE and also please bear with me, my knowledge of ISA's (despite the cake!) is not great!

I paid a fair chunk of money (just over £3k) into an E-ISA with Northern Rock in Sept 2011. I've just checked my interest, and the amount I've earnt was around £46... Now I'm no great mathematician but that's just over 1% right.... This can't be correct surely? Or have I got the concept of ISA's completely wrong?

I would have got the Northern Rock idea from MSE so I wouldn't have gone with a bank that offered such a low rate.

Have I been stitched up or am I getting it completely wrong and interest is based on some other variable?

Thanks so much for any advice!

Rachel

(P.S. Clearly going to be moving my money soon - but am too confused right now to know where to move it!)

psychic_teabag

I make it around 1.5%. Only 6 months have elapsed since September, so you're on course to earn around 3% or so for the year, which is not at all unreasonable.

There might be a case for transferring now : rates are good at the moment, and transferring now will give you another 12 months. Your existing rate might fall off after a year, and there may not be such good rates around then. (And if the rates are better, you can just transfer again.)

AirlieBird

You are not the first to misunderstand how interest works. You do not get paid 3% of whatever balance you have on the day interest is paid. Interest is calculated each day and is put aside and paid to you on a given day stated by the terms and conditions. The 3% interest represents the annual interest rate. At the end of each day you will earn 1/365th of 3%; in other words the daily rate is 0.0082% of the balance in the account.

This is not unique to ISAs; it is how all savings accounts work.

bigfreddiel

racheyb wrote: »

Hello ! My first post on MSE and also please bear with me, my knowledge of ISA's (despite the cake!) is not great!

I paid a fair chunk of money (just over £3k) into an E-ISA with Northern Rock in Sept 2011. I've just checked my interest, and the amount I've earnt was around £46... Now I'm no great mathematician but that's just over 1% right.... This can't be correct surely? Or have I got the concept of ISA's completely wrong?

I would have got the Northern Rock idea from MSE so I wouldn't have gone with a bank that offered such a low rate.

Have I been stitched up or am I getting it completely wrong and interest is based on some other variable?

Thanks so much for any advice!

Rachel

(P.S. Clearly going to be moving my money soon - but am too confused right now to know where to move it!)

Rachel,

just out of curiosity can you tell us all how you thought interest worked - ignore the fact its an isa as that makes no difference.

cheers

fj

evenasus

This is the fourth poster in the last couple of weeks who think they can put money in a savings account for a few weeks or months and still receive a whole year's worth of interest.

One poster thought he could drop the whole ISA allowance into Santander a week before the interest was due to be paid - and still receive 4% of £5640.