Monthly vs annual interest

JTeighty

Hi,

May seem like a dumb question but how is annual interest calculated? Is it on the remaining balance at the end of the year or is it calculated monthly and paid annually.

Main question is: If I were to put £1k in at the start of the year and take out £250 6months later, will I still get 6m interest on the 250 I took out or just on the £750 balance left.

Thanks,

J

Lokolo

Interest is accured on a daily basis.

So in your example you will get 6 months of interest from £1k, and 6 months at £750.

JTeighty

Lokolo wrote: »

Interest is accured on a daily basis.

So in your example you will get 6 months of interest from £1k, and 6 months at £750.

Great! thanks for the response.

alanq

Lokolo wrote: »

Interest is accured on a daily basis.

I don't know if there are any exceptions to that rule today but there used to be accounts which calculated interest on the minimum balance during a month.

Also Nationwide, for example, has an account with which no interest is earned during any month in which the balance falls.

As always the advice is not to make assumptions but read and understand the Ts&Cs for any account before applying.