Help with Maths (interest) and ISA question.

fimonkey

Hi All.

I've just opened an Alliance and Leicester Direct Saver account paying 6.1% and I want to deposit 30K in there. How much will the monthly interest be please (and how exactly is this calculated)? - Sorry, Maths not my strong point at all!

Also, I have an NSandI ISA, and when I opened it last year it was paying 5.85%. Now I see it's paying 6.05%. Again please excuse my ignorance, But will that rate apply to me too or am I on the old rate?

I now have £6033 in this ISA. Is interest calculated daily/monthly/yearly? and if I don't touch any of this money how much interest wil I get next April? (Again how is this caluclated please)?

Finally, are there any regular saver accounts where I can begin to stash £250p.m that do not require you to hold a current account with the same institution please?

Very many thanks in anticipation

joshm_2

To get the ball rolling:

30,000 x 6.1/100 = 1,830 (total interest in a year before tax and ignoring compund effect)

1830 / 12 = 152.5 (interest per month before tax and ignoring compound effect)

I have an NSI ISA too, I have just recieved a letter about the rate rise (i.e. I benefited from it). It depends on whether you took out a fixed rate ISA or not. Mine was tracking at base rate + 0.55%. If yours isn't fixed, chances are you'll benefit.

fimonkey

Thanks John (The scales are missing for me to thank you, where have they gone?).

Now that bit seems simple, .. but what about factoring in interest? In a basic rate tax payer.. how much is that off the amount per month please?

YorkshireBoy

fimonkey wrote: »

I've just opened an Alliance and Leicester Direct Saver account paying 6.1% and I want to deposit 30K in there. How much will the monthly interest be please (and how exactly is this calculated)?

You can't use the AER figure. You need to use the gross p.a. figure of 5.94%.

Interest is calculated daily and paid monthly, so...

Interest = £30,000 x 5.94% / 365 x n

where n = number of days in month.

For example, in June you'll earn...

£30,000 x 5.94% / 365 x 30 = £146.47 gross

Multiply this by 0.8 (for 20% tax deducted) to get the net figure of £117.17

Finally, are there any regular saver accounts where I can begin to stash £250p.m that do not require you to hold a current account with the same institution please?

YBS and Halifax immediately spring to mind. Check out the regular savings article on the main site and/or visit https://www.moneyfacts.co.uk

dancingfairy

I would imagine that your interest rate on the NSandI ISA should have gone up with the base rate to 6.05%. Interest I believe is calculated on a daily basis but addes yearly I believe. If you worked it out daily the interest would be something like:
6033 * 0.0605/365 * 1 (for 1 day) and then repeated 365 times and totalled + the original amount.

As you are leaving it in there untouched for a year it should be 3066 * 1.0605 = £6397.997
As it is in an Isa you won't have to pay tax on it. HOORAY!

Also the reason you multiply the amount by 1.0605 is because you multiply it by the 1 as you are including the capital in the calculation ie you want to work out the final total including the capital , if you wanted to just work out the interest you would just times it by 0.0605. The .0605 is the interest rate as a decimal. Hope this helps a bit.

fimonkey

Cheers dancing fairy, unfortunately that's just completely and utterly confused me! arghhhh... I HATE being numerically illiterate, despite a B GCSE maths (many moons ago) because I don't use figures on a daily basis I have no 'feel' for them.

Right, say I have 32K, in an account paying 5.25% Gross, I'm a BR taxpayer. So this pays 4.2% Net (I had to look that one up, couldn't calculate it cos I'm a dunce). Interest is paid annually (yes it's the halifax websaver without cashcard). The interest on this balance (32000/100) x 4.26/365 = £3.73 per day, or £1363.20 per year........IS THIS CORRECT?

Assuming same above, but this time 6.1% Gross (4.76% net) (Yup the A&L direct saver account, which is taking me FOREVER to open cos they want my signature in verified in blood) = (32000)/100 x 4.76/365 = £4.17 oer day or £1523.20 per year.

Have I got the above two right?

I haven't a CLUE where to start ni terms of compunding it, if it's paid monthly, is this a better deal than if it's paid yearly? Or is the compund worked out on the daily figure regardless of when interest is paid?

THANKS ALL, I'm really managing to educate myself here!