Santander-123 account 3%AER??

DaveWP

I have just used the Santander savings calculator to find out how much interest I would make if I ensured I always had the full £20000 the account. The calculator is only showing an interest payment of £592.

The guys on the help desk could not provide an answer as I thought 3% AER would give a total interest payment of £600. They have confirmed the interest is payable on the full balance and there is not stepped element in the interest rate calculation.

Any ideas on how Santander get to £592 ... which I think is an AER of 2.96% AER?

grumbler

3% figure takes compounding into account (unlike 2.96%) that is not the case if the starting balance is £20000 and the added interest makes it over the maximum amount that the interest is paid on.

It has to be full 3% on any starting balance below £20000/1.03=£19417.48.

As simple as that.

jaffers

I have a Santander 123 account and it definately pays, You get interst and also cashback on petrol/utilities that Iwe all pay for anyway. I always pay in full each month so the bank does not make anything from me.

macman

As above, the interest is added monthly and compounded.

YorkshireBoy

macman wrote: »

As above, the interest is added monthly and compounded.

Can't be compounded, as the balance will be over £20K as soon as the first interest payment is made.

As grumbler has already stated.