Monthly or yearly interest?

alanjones60

I have opened a 18 month bond with charter savings bank.
Thay have said i can have interest paid yearly or monthly. 
What is the best option for me please?
63 year old male, taken evr in may 2015,i have a private pension of £7,500 a year which goes up with inflation rate in september.
I have not worked since.

refluxer

Are you having the interest paid away or into the same account ? Some people like to have the interest as regular income, in which case having monthly option paid away tends to work best. Taking the interest monthly (whether into or out of the account) also helps to spread it evenly over different tax years which can of benefit to some whereas for others, it might be beneficial to take it annually in order to push the payment into the next tax year. If you're a low earner though (earn less than £18,570 in combined income and savings interest), then this might not be relevant as you won't be paying tax on your savings interest.

If the AER on a fixed rate account is the same for both options then the amount of interest you'll receive will be virtually identical, if it's paid into the same account and allowed to compound. (You'll only achieve the gross rate if it's paid away).

alanjones60

I am having it paid into the same account.
I can see from your reply,that it wont matter to me,as the interest i earn will be well below £18,570 you have quoted.
Thanks for the detailed reply. You have been very helpfull

refluxer

alanjones60 said:

I am having it paid into the same account.
I can see from your reply,that it wont matter to me,as the interest i earn will be well below £18,570 you have quoted.
Thanks for the detailed reply. You have been very helpfull

Just make sure you include all your income in that calculation which includes salary, pensions and interest earned from all your savings accounts (excluding ISAs)

This is worth a read... https://www.moneysavingexpert.com/savings/tax-free-savings/

refluxer

Also - just be aware that the money will be locked away for the whole of that period so make sure this is money you really won't need access to.

alanjones60

Yes i did inclued everything,and am well below it.
Yes i will not need the money for the term of the bond.
Thanks again