Interest rate vs. What you get

Tristan92Tristan92 Forumite
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Hi all, I have the majority of my savings in Tandem bank which allows a 2.95% interest rate I think. I’ve just accrued £58 at the end of this month, but thought with the amount I have in there, I would’ve got more?

My initial calculations suggested I would get £1,400 a year approximately but if you multiply £58 by 12 as a rough calculation, you don’t get to that number..

Sorry for the newbie/silly post but just wanted to check. The amount I have in there is £50k

Thanks,

Replies

  • Dazed_and_C0nfusedDazed_and_C0nfused Forumite
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    Did you have £50,000 in that account for the whole of January?

    Did the interest rate change during January?
  • SAC2334SAC2334 Forumite
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    Using L and C Mortgaes Savings Interest Calulator , £50 k for a full month at 2.95 % makes £123 a month  before tax or if you are a 20%  tax payer it makes   £98 a month.

    You can t have had that amount for the full month  since you deposited it .
  • AlbermarleAlbermarle Forumite
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    SAC2334 said:
    Using L and C Mortgaes Savings Interest Calulator , £50 k for a full month at 2.95 % makes £123 a month  before tax or if you are a 20%  tax payer it makes   £98 a month.

    You can t have had that amount for the full month  since you deposited it .
    More accurately, if you are a basic rate taxpayer, who has exhausted their £1000 personal savings allowance  elsewhere.
    Or if the OP earns less than £17,500, then they can also make use of the savings starter rate.
  • edited 2 February at 11:31AM
    AmityNeonAmityNeon Forumite
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    edited 2 February at 11:31AM
    Which Tandem account is offering 2.95%?

    Interest is calculated daily, so your account balance at the end of each day is multiplied by the gross interest rate, then divided by 365. The daily amounts accrue and are paid gross so your tax position won’t affect the amount received.
  • wmb194wmb194 Forumite
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    The first thing you need to do is confirm the rate of interest your account(s) is earning.
  • grumblergrumbler Forumite
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    SAC2334 said:
    Using L and C Mortgaes Savings Interest Calulator , £50 k for a full month at 2.95 % makes £123 a month  before tax or if you are a 20%  tax payer it makes   £98 a month.

    We are talking here about the amount credited to the account, that has nothing to do with taxes as banks don't collect tax on the interest they pay.


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  • edited 2 February at 2:07PM
    RG2015RG2015 Forumite
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    edited 2 February at 2:07PM
    I have just had a look at the Tandem instant access account and do not see 2.95%.

    The rate is shown as 2.52% gross or 2.72% gross with the 0.20% top up. If you choose monthly interest you get the gross rate, not the AER rate which is 0.03% higher to factor in annual interest compounding.

    £50,000 would give the following.

    £50,000 x 2.52% x 17 days / 365 = £58.68

    or

    £50,000 x 2.72% x 16 days / 365 = £59.62

    This looks like the £50,000 was deposited on about 14th or 15th January.


  • RG2015RG2015 Forumite
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    Tandem is now showing as 3.05% with the bonus so you have a good deal here Tristan92


    https://www.tandem.co.uk/products/savings

  • jimjamesjimjames Forumite
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    To answer the question originally raised, the interest rate IS what you get. If your calculation doesn't give the same value then either the rate or amount is wrong in your calculation. I was expecting a regular saver question where the query about rates occurs very regularly!
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Tristan92Tristan92 Forumite
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    Thanks everyone for your input. I think it’s because I didn’t have the full amount in there originally. I’ve only just opened this account in the past couple of months and today received a fair amount of interest which when multiplied by 12 is much better than originally calculated.

    Thanks!
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