Annual interest on savings

harlequinnyc

This is probably a really stupid question but does moving money out of an annually paid interest account before the year is up, lose that interest? If it does, that would in effect make the account a one year fixed?

masonic

Interest is calculated daily on the vast majority of accounts. You will not lose accrued interested unless there is a specific penalty for withdrawals.

[Deleted User]

What do your mean by 'lose that interest'? If the account is an easy access account, you will get the interest up until you take the money out. If on the other hand, the account is a fixed rate account (1 year or whatever), you cannot draw any money out before the maturity date. So there is no loss of interest. I wouldn't say your question is stupid, but it is somewhat unclear about you're actually asking.

harlequinnyc

What I'm trying to say is, if the interest is only paid on the anniversary of opening the account and I moved the money in it to another account at say, the 8 month mark; then what happens to the interest I have accrued in 8 months?

Linton

When you close the account the interest you have earnt to date will be added.

colsten

harlequinnyc wrote: »

What I'm trying to say is, if the interest is only paid on the anniversary of opening the account and I moved the money in it to another account at say, the 8 month mark; then what happens to the interest I have accrued in 8 months?

As already mentioned, the interest is calculated daily. So if you have money in the account for 8 months and then take all the money out but leave the account open, your money will earn some interest for 8 months, and then £0 interest for the remaining 4 months as x% of £0 equals £0. When it comes to your annual interest payment date, you will get £x for 8 months plus £0 for 4 months, i.e. the exact amount of interest your money earned whilst it was in the account.

If you closed your instant access account after 8 months, which you are entitled to do, the provider would pay the interest earned up to the closure date immediately.

harlequinnyc

Thank you all you have answered my unclear question clearly. Appreciated.

polymaff

harlequinnyc wrote: »

This is probably a really stupid question but does moving money out of an annually paid interest account before the year is up, lose that interest? If it does, that would in effect make the account a one year fixed?

There's no simple answer. It all depends upon the terms and conditions of the account.