Stupid question re: savings interest

libgysig

I save monthly for things like home insurance, MOT etc. and I put them into my ISA. I pay for these things when they're due on a cashback credit card, then pay them straight off with these savings in the ISA, t hus the amount varies month to month. Stupid question: will I receive any interest on the money that has been there throughout the year, or is the interest calculated on what is in the account at the end of March?

Thanks in advance.

JimmyTheWig

You'll get interest based on the daily balance. The longer the money is in there, the more interest you'll get.
Otherwise someone would be able to put a load of money in an account at the end of that account's year and get a whole year's worth of interest.

thenudeone

libgysig wrote: »

then pay them straight off with these savings in the ISA,

I hope you mean - you wait until the statement is produced then pay it off in full just before the due date.

That way you get more interest on your savings and a better credit rating as well. If your monthly credit card statement always shows zero, it looks as if you haven't borrowed anything.

libgysig

thenudeone wrote: »

I hope you mean - you wait until the statement is produced then pay it off in full just before the due date.

That way you get more interest on your savings and a better credit rating as well. If your monthly credit card statement always shows zero, it looks as if you haven't borrowed anything.

No - I hadn't really thought it made a difference but I will do that in future. Thanks

JimmyTheWig

libgysig wrote: »

No - I hadn't really thought it made a difference but I will do that in future. Thanks

Lets say you spend £300 on your card.
You usually get on average about a month between spending and having to pay.
That could mean an extra month's interest on £300.
At 3% interest that would be 75p.
Not loads, but if you do the same every month then that's £9 over the year.
Maybe £9 isn't worth going far out of your way for, but as it's just a case of paying the same bill at a different time you may as well.

Always remember to pay the bill off in full each month by the due date to avoid interest. Remember to check how long a payment takes (depends on how you pay).
If you set up a direct debit (would probably have to do this from your current account rather than directly from your ISA) to pay the full balance each month then it's up to them to sort out when to take the money so you won't miss it.

libgysig

JimmyTheWig wrote: »

Lets say you spend £300 on your card.
You usually get on average about a month between spending and having to pay.
That could mean an extra month's interest on £300.
At 3% interest that would be 75p.
Not loads, but if you do the same every month then that's £9 over the year.
Maybe £9 isn't worth going far out of your way for, but as it's just a case of paying the same bill at a different time you may as well.

Always remember to pay the bill off in full each month by the due date to avoid interest. Remember to check how long a payment takes (depends on how you pay).
If you set up a direct debit (would probably have to do this from your current account rather than directly from your ISA) to pay the full balance each month then it's up to them to sort out when to take the money so you won't miss it.

Cheers, JimmytheWig.

We use a cashback credit card for all the spending that we know that we can pay off straight away (e.g. food, petrol, stuff we've saved for like home insurance) and I've just operated the card by paying it as soon as we've spent it, rather than waiting for the statement to come around - didn't realise that this practice would have an impact on the credit rating. I know this is the wrong board for credit cards but I'm grateful for the tip.