How is interest calculated for regular savings accounts

sean9461

Hi I'm just wondering how interest is worked out on savings accounts mainly for example

If I was to deposit 1000 pounds into a regular savings account that pays interest monthly but withdraw that 1000 pound before the end of the month would I still qualify for the interest at the end of the month?

Or would they just look at the balance at the end of the month and see it as 0 and give 0 interest?

Thanks :-)

masonic

RS accounts often have restrictions around withdrawals, so you might pay an interest penalty or be disqualified from earning the headline rate as a result of the withdrawal. Assuming that doesn't happen, interest is calculated on exactly the same basis as other accounts - calculated daily on the closing balance of the account, so you will accrue interest at 1/365 of the gross rate each day (assuming non-leap year).

Edit: or do you mean "regular" i.e. normal savings accounts, not "regular savings" accounts (it makes no difference, other than the first sentence will not apply).

sean9461

Sorry yeah I mean normal ones with only like 1% if it's calculated at the end of the day then if I withdraw the money before the end of the day after I deposited it I won't get anything at all?

masonic

sean9461 wrote: »

Sorry yeah I mean normal ones with only like 1% if it's calculated at the end of the day then if I withdraw the money before the end of the day after I deposited it I won't get anything at all?

No, generally the money would need to remain in the account overnight (although some "clever" people have exploited cut-off times to gain interest on the same money in two places - this usually ends in tears when the banks get wise to it).

sean9461

Ah right i figured there would just be a certain time money had to be in the account to qualify for interest for that period

sean9461

I thought there might be a way to get loads more interest haha :-)