Three pence interest in 58 years?

swapper1937

I hope this is the correct Forum, if not, apologies.
A member of our family recently died. amongst the effects was a Post office savings book, with a balance of five shillings! last entry 1955.
The book was sent to the Post Office and a cheque for twenty eight pence (28p) was returned.
We don't know what to spend it on, but where the heck did they work out the interest of three pence?
Anyone good at sums please?:rotfl:

Glen_Clark

Apparently £1 in 1958 would be worth £40 today. Which means your 25p would be just over £10 if net interest rates had matched inflation.
http://wiki.answers.com/Q/How_much_is_one_pound_sterling_in_1958_worth_today

dzug1

At some point they will have stopped paying interest on balances of less than £1. Once that date passed - and I have no idea of when that was - the account was effectively frozen at its then balance

theGrinch

reminds me of that episode of red dwarf when interest was left in the bank and compound interest kicked in over the centuries.

thick_tom

its more than 100% interest.

chris_m

theGrinch wrote: »

reminds me of that episode of red dwarf when interest was left in the bank and compound interest kicked in over the centuries.

You sure that was Red Dwarf? The only thing like that I recall was where Lister had left a light on and the only people with any money ended up being him and ManWeb/NorWeb.

There was the way to pay for your meal at the Restaurant at the End of the Universe in The Hitch Hikers Guide to the Galaxy where you deposit one penny and compound interest would mean that the huge cost of your meal was covered.

dzug1

thick_tom wrote: »

its more than 100% interest.

What is?

3p interest on the original sum of 25p (included in the payment) comes to 1.2%

Total, not per year.

gozomark

dzug1 wrote: »

What is?

3p interest on the original sum of 25p (included in the payment) comes to 1.2%

Total, not per year.

12% not 1.2%

notbritishgas

dzug1 wrote: »

What is?

3p interest on the original sum of 25p (included in the payment) comes to 1.2%

Total, not per year.

I make it 12%.

Edit; Oh dear, beaten to it (again).

dzug1

notbritishgas wrote: »

I make it 12%.

Edit; Oh dear, beaten to it (again).

oops yes - misplaced decimal place:o

Archi_Bald

3p over 58 years sounds about right if the interest rate was 0.2% all the while, and interest calculated/compounded daily.

If, however, the account would have attracted the BoE interest rates throughout the 58 years, the 25p would now be worth something like £16.50.

Actual interest rates do of course vary from account to account and might have been lower or higher than the BoE rates. It is also conceivable that the account was dormant back in 1955 already.

If you want to do your own calculations, you can get a list of historic interest rates in spreadsheet format here: https://spreadsheets.google.com/ccc?key=0AonYZs4MzlZbcGhOdG0zTG1EWkVQTjBYWm9pWHVRWkE&hl=en