How to work out interest payments?

yellow218

This may seem really barn-door obvious, but how do you work out how much interest you should get?

I have an account which pays interest monthly. It's low interest at 0.25% (I've maxed out the accounts on MSE list that make more, I plan on spending this money in the next year or so, so I don't want to invest it in any other way, but I would like to make some interest on it if i can). I have £10k in this account, so by my calculations I should receive £25 per month in interest.

However I received just over £2.

Have i been under paid? Or are my calculations incorrect?

jennyjj

yellow218 wrote: »

I have an account which pays interest monthly. It's low interest at 0.25% (I've maxed out the accounts on MSE list that make more, I plan on spending this money in the next year or so, so I don't want to invest it in any other way, but I would like to make some interest on it if i can). I have £10k in this account, so by my calculations I should receive £25 per month in interest.

However I received just over £2.

Have i been under paid? Or are my calculations incorrect?

Ah! You miscalculated rather dramatically.
0.25% interest is the rate per year, not per month. Even if it is paid monthly.

0.25% of £10,000 is £25 per year. . . which as you discovered is about 25/12 = £2 per month

Interest rates are super low at the moment. Consider shopping around as per the ample advise on this forum.

durhamviper

0.25% * 10K does give £25, but that is the annual interest so the monthly amount will be dependent on the number of days in the monthly. For a month of 30 days it will be £25 × 30 ÷ 365, so would be £2.05.

yellow218

Ahhh, that makes sense now. Feeling slightly embarrassed!

bowlhead99

yellow218 wrote: »

Ahhh, that makes sense now. Feeling slightly embarrassed!

Remember there's no such thing as a silly question here

Plenty of silly people though

badger09

bowlhead99 wrote: »

Remember there's no such thing as a silly question here

Really?

Not even this one?

https://forums.moneysavingexpert.com/discussion/5535809

bowlhead99 wrote: »

Remember there's no such thing as a silly question here

Plenty of silly people though

Agreed:)

Thrugelmir

Might as well buy premium bonds.;)

darkidoe

Thrugelmir wrote: »

Might as well buy premium bonds.;)

That would be gambling with interest money.

Eco_Miser

yellow218 wrote: »

I have an account which pays interest monthly. It's low interest at 0.25% (I've maxed out the accounts on MSE list that make more,

NS&I pays 1% per annum - that's four times as much so about £8 a month on £10k, but the limit is way, way higher.

ceredigion

yellow218 wrote: »

This may seem really barn-door obvious, but how do you work out how much interest you should get?

I have an account which pays interest monthly. It's low interest at 0.25% (I've maxed out the accounts on MSE list that make more, I plan on spending this money in the next year or so, so I don't want to invest it in any other way, but I would like to make some interest on it if i can). I have £10k in this account, so by my calculations I should receive £25 per month in interest.

However I received just over £2.

Have i been under paid? Or are my calculations incorrect?

You sure, with list ?

yellow218

Thanks all. Decision made. Pay off some of the mortgage instead, at least that'll save me some interest if I can't make any