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Simple interest question

pauljoecoe
Posts: 223 Forumite
Sorry, its probably obvious but I am struggling this morning.
I have £2500 in my Nationwide flex direct account which I believe is paying 5% interest.
How much should I see added to the account each month? (before tax)
I have £2500 in my Nationwide flex direct account which I believe is paying 5% interest.
How much should I see added to the account each month? (before tax)
0
Comments
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0.05/12 * £2,5000
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I guess it depends whether they pay interest monthly - assuming they do then:
=2500 * 5% /12
=10.42
(gross ie before tax)0 -
Somebody will come along to answer you properly in a bit I'm sure, but the answer is 'a bit less than £10.41'.
You don't get 5%*2500/12 if that's what you're wondering, because the monthly interest is added to the account and you earn interest on that interest so it comes to 5% over the year.“I could see that, if not actually disgruntled, he was far from being gruntled.” - P.G. Wodehouse0 -
You wont get interest on interest as you'll have to cyphen it off each month as anything over £2,500 does not earn interest.0
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MoneySaverLog wrote: »You wont get interest on interest as you'll have to cyphen it off each month as anything over £2,500 does not earn interest.
In that case you're probably not getting 5%, OP.“I could see that, if not actually disgruntled, he was far from being gruntled.” - P.G. Wodehouse0 -
Ah. I was a little confused because I got my first statement and it said £0.33 and then £0.06 taken off (in tax I presume)
However I have just noticed that the opening credit amount was put in on 31st May and the interest added was 31st May so I guess thats one day interest?
£0.33 X 31 = £10.230 -
MoneySaverLog wrote: »You wont get interest on interest as you'll have to cyphen it off each month as anything over £2,500 does not earn interest.
The monthly rate will be 1.05^(1/12) -1 ie 0.4074% ie £10.19 a month if you have £2500+ in the account
Confirmed on the NW web site:5.00% AER (4.89% gross p.a.)0 -
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I got £8.04 in April and £8.31 in May0
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