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Shawbrook annual vs monthly interest

Tedness
Tedness Posts: 6 Forumite
Sixth Anniversary
in Savings & investments
Hi everyone!

I would like to open a savings account with Shawbrook Bank. There are two options for the interest: 3.65% annually or 3.59% monthly. Does anyone know how I can work out which option would pay more interest? Thanks!

Comments

  • eskbanker
    eskbanker Posts: 40,147 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    They're the same, i.e. (1+0.0359/12)^12 = 1.0365 (maybe a penny or two either way in rounding).
  • wmb194
    wmb194 Posts: 5,895 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Tedness said:
    Hi everyone!

    I would like to open a savings account with Shawbrook Bank. There are two options for the interest: 3.65% annually or 3.59% monthly. Does anyone know how I can work out which option would pay more interest? Thanks!
    You compare the AER, which is the same, it's just that with monthly interest payments you see it being compounded whereas with annual you don't.




  • ColdIron
    ColdIron Posts: 10,325 Forumite
    Part of the Furniture 10,000 Posts Hung up my suit! Name Dropper
    edited 14 May 2023 at 11:40AM
    They both have an AER rate of 3.65% so they would pay the same if you kept the monthly interest in the account
    See the explanation of AER vs Gross


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