Simple interest question

innovate

Interest is calculated daily, not monthly. Therefore there will be slight variation in what gets paid from month to month,e even if you have the full £2.5 in the account all month.

On the last day of each month we calculate the interest you've earned each day of that month and then pay you this interest on the 1st day of the next month.

Source: http://www.nationwide.co.uk/current_account/flexdirect/FAQs.htm

If you search around, you can find more detail on interest calculation in the T&Cs.

YorkshireBoy

pauljoecoe wrote: »

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)

With all accounts, not just the one you have here, you always earn interest at the gross p.a. rate.

The interest on your static balance would be:

Balance x gross p.a. rate / 365 x n

where n = number of days in the month

So for June you'll earn:

£2.5K x 4.89% / 365 x 30 = £10.04

If this is taxed, you'll see £10.04 x 0.8 = £8.03


Disclaimer: They may round these figures. As 'ColdIron' says above they got £8.04 in April which also had 30 days.