Santander ESaver interest calculations wrong?

LXdaddy

None of the regular savers I am aware of add interest either daily or monthly. The interest is added at the end of the year so there is no compounding.


If every month was the same length and the regular deposit were made on the first day of each "period" then the series of time in the account for each deposit would be 12, 11, 10, 9, 8, 7, 6, 5, 4, 3, 2, 1 which is a average of 6.5. That's why the gross interest is approximately 6.5 * deposit amount * gross interest rate.

polymaff

adindas wrote: »

How accurate is this one to be compared with including daily compounding ?? Say for £200 monthly payment Is it less than £1 difference ?

I could compare this myself using spreadsheet or online calculator. But just wonder whether other people have done this comparison before ??

Thanks again..

Daily compounding hits it on the nose - providing you don't use the Alice in Wonderland 13-month calendar used earlier in this thread - and there is no need to calculate every day - just for each period when the principal/rate is the same.

The "6.5" method I mentioned in post # 11 is a pretty good one. I've already set out in post # 24 why it is not exact. From this you can see why the error itself can vary, but in my experience the error is usually less than 1%.

Ballard

PeacefulWaters wrote: »

I prefer total saved X rate X 6.5 / 12.

The problem is that I can't do that in my head. I can (generally) do half saved x rate though.

polymaff

All of the ideas for evaluating interest on a Santander Reguler eSaver mentioned - including mine - assume the same interest rate thoughout the first 12 months.

It is, however, "5.00% AER/Gross rate (variable)" so, ultimately, what you end up earning during the 12 months is up to Santander.

Just thought I'd mention it