123 interest payment frequency?

jimmy*c

Evening moneysavers,

Just a quick question. I opened up a Santander 123 current account today as I'm about to get under way with saving and switching accounts. As I understand it, having read the account details, interest and cashback are paid monthly. With that, on balance of £3000, I'd be getting £90 in interest, the next month i'd be getting 3% on £3090 etc etc.... right?

I'm asking because when I used their calculator to see what I'd be getting, i put in the £3000 balance, and it said my ANNUAL interest total would be £89...

Am I missing something here?

Norman_Castle

Annual interest of 3% paid monthly. 3% (£90) divided by 12. About £7.50 per month.

Ed-1

jimmy*c wrote: »

Evening moneysavers,

Just a quick question. I opened up a Santander 123 current account today as I'm about to get under way with saving and switching accounts. As I understand it, having read the account details, interest and cashback are paid monthly. With that, on balance of £3000, I'd be getting £90 in interest, the next month i'd be getting 3% on £3090 etc etc.... right?

I'm asking because when I used their calculator to see what I'd be getting, i put in the £3000 balance, and it said my ANNUAL interest total would be £89...

Am I missing something here?

3% is the AER (annual equivalent rate). So you'd get 3000 x 0.03 = £90 interest for the year. Interest is calculated daily on the balance each day (so will be balance x 0.0296 / 365) and credited monthly so if the month had 31 days, you'd get the daily balance x 0.0296 / 365 x 31). The rate is 2.96% to account for monthly interest compounding - i.e. once interest is credited to the account each month it then earns interest on the interest for the following month and each month thereafter etc.

jimmy*c

I see - Rookie mistake, thanks for clearing that up guys :beer:

cheexy

Just a quick one. Is the interest payment paid on the anniversary of the account or on a particular date?

Hazzanet

[STRIKE]Anni[/STRIKE]Monthiversary.

ffacoffipawb

Hazzanet wrote: »

[STRIKE]Anni[/STRIKE]Monthiversary.

I think the term is mensaversary.

xylophone

mensa = table

mensis = month

http://www.grammarphobia.com/blog/2012/01/monthly-anniversary.html

anoncol

xylophone wrote: »

mensa = table

mensis = month

http://www.grammarphobia.com/blog/2012/01/monthly-anniversary.html

Neither are in the dictionary so both are valid or wrong.

dzug1

It's paid monthly - on or just before the statement date.

cheexy

Thanks all for the laughs... and the info.