How do you work out the interest rate

Boohbah

On a £100,00 savings account with ICICI @ 6.5%aer, what interest would that attract each week.
Also, how would you arrive at that figure.

kingmonkey

Roughly 10,000 *6.5%/52 = £12.50

More precise £10,000 * (1+6.5%)^(1/52)-1 = £12.12

EDIT: The above is gross. Net would be:

Roughly £10,000 *6.5%/52*(1-20%) = £10.00

More precise £10,000 * (1+6.5%)^(1/52)-1 * (1-20%) = £9.70

save-a-lot

Hi

The above calculation gives the gross interest, remember to adjust those figures for tax

nilrem_2

Boohbah wrote: »

On a £100,00 savings account with ICICI @ 6.5%aer, what interest would that attract each week.
Also, how would you arrive at that figure.

I may be wrong as I don't use ICICI but isn't their rate 6.05% rather than 6.50%?

If it is 6.05% then that is the AER figure the actual rate before tax is 5.89% gross therefore after saving tax @20% is deducted the rate paid will be 4.71%.

10,000 x 4.71% = £471 per year divide by 52 weeks = £9.05 interest per week.:)

nilrem_2

BTW if you are under the tax threshold then you can arrange to receive your interest tax free in which case the amount would be-:

10,000 x 5.89% = £589 divided by 52 weeks = £11.32.

IGK

To be really accurate you should take the annual interest and divide by 365 to get daily interest, then multiply by 7 to get weekly.
For example, the AER is 6.05%, then the annual interest on £10,000 is £605, which is £1.6575 per day or £11.60 per week, before tax.

The reason the gross rate of 5.89% is lower than the AER is because interest is paid monthly. Assuming you don't withdraw the interest (and it is added to the balance each month) then the gross interest over a year would be the equivalent of 6.05%, as the interest earned over the intervening months is compounding.

McSaver

i think he has a problem with his "0" key on his keyboard...

6.5% should be 6.05% and the 100,00 should of been 100,000.

My Answer is 93.08 Per Week After TAX