Virgin Money M account

[Deleted User]

Hi new user here,

I’m trying to figure out the AER and gross interest rate on the account but am unsure as to how to go about it. Can anyone help me please?

Details are below:


Feast on a 2.02% AER1 (2.00% gross1 per annum variable) interest rate, paid monthly, on your M Plus Account balance up to £1,000.

Daliah

Deleted_User said:

Hi new user here,

I’m trying to figure out the AER and gross interest rate on the account but am unsure as to how to go about it. Can anyone help me please?

Details are below:


Feast on a 2.02% AER1 (2.00% gross1 per annum variable) interest rate, paid monthly, on your M Plus Account balance up to £1,000.

Not entirely sure what your question is but assuming you would like to know what the maximum interest is you can make from the account: it is £20 a year. You have to have £1,000 in the account at the end of every day of the year to make this sum. They pay the interest monthly (balance * gross rate / 365 * number of days in month), so around max £1.53 - £1.70 a month, depending on how many days there were in the previous month.

eskbanker

Deleted_User said:

Hi new user here,

I’m trying to figure out the AER and gross interest rate on the account but am unsure as to how to go about it. Can anyone help me please?

Details are below:


Feast on a 2.02% AER1 (2.00% gross1 per annum variable) interest rate, paid monthly, on your M Plus Account balance up to £1,000.

As above, it's not particularly clear what your question is, but if you're perhaps looking to understand what AER and gross interest actually mean, gross is the rate used to calculate the interest that's added to the account each month, and if this is left there to compound (i.e. earning interest on interest) then at the end of the year you have the slightly higher Annual Equivalent Rate.

On accounts (such as this one) where the interest-earning capacity is capped to a fixed figure (£1K here), you can't actually earn the full AER if the account is fully funded to the maximum, as the interest won't compound.

[Deleted User]

Thanks for your help and sorry for not explaining further. I’m trying to figure out the formulas for AER and gross rate and how they apply to the M account.

EarthBoy

Deleted_User said:

Thanks for your help and sorry for not explaining further. I’m trying to figure out the formulas for AER and gross rate and how they apply to the M account.

You don't get any interest on the M Account, only on the M Plus Account. 

[Deleted User]

Sorry my bad!

[Deleted User]

Sorry let me rephrase the question completely.

I’ve applied for the M Plus Account and noticed that it has an AER of 2.02% and gross interest rate of 2.00%.

What is the AER formula for calculating how much I will get in pounds?

eskbanker

Deleted_User said:

Sorry let me rephrase the question completely.

I’ve applied for the M Plus Account and noticed that it has an AER of 2.02% and gross interest rate of 2.00%.

What is the AER formula for calculating how much I will get in pounds?

The interest is actually paid using the gross rate, via the formula posted by @Daliah above, and if you leave the interest in to compound then it'll be equivalent to the AER return, assuming that there's enough headroom for the interest to compound.

Zanderman

To clarify that equation - which Daliah gives as balance * gross rate / 365 * number of days in month (which, without more formatting - the forum set-up isn't good for equations - might suggest the days in the month were a factor in the denominator) the equation is:

Per month:
Gross rate of 2% (i.e. 0.02) multiplied by £balance in the month (assuming it stays the same, which it won't if you're using the account as an active current account)

Divide that result by 365.

Multiply that result by number of days in the month.

Which will be the answer, per month.

If your balance varies during the month you'd have to work out the interest daily (0.02 x balance and then divided by 365) for each day in the month and then tot it up.

All in all not a particularly rewarding exercise though as the max you can ever get is £20 a year total.

[Deleted User]

Thanks for everyone’s help. I’m new to this and want to manage my financiers better.

[Deleted User]

I meant financies.