(Nationwide) Loyalty Saver interest question

NX4737

Good morning, 

I have a question in regards to interest rates for a savings account, I've tried Googling but everything I read just leaves me with more questions than answers... 

Basically, I have £10,000 in a Nationwide Loyalty Saver account that has an AER of 3.75%, paid out on 31st December each year, the money has been in the account for over 12 months without being touched, so if I'm correct, on the 31/12/23, Nationwide will drop £375 interest into the account if I left the account alone and did nothing.

However, here is where I'm struggling to get my head around how things work, on 01/10/23 I moved £5000 into the account bringing the total up to £15,000, how would Nationwide now calculate the interest, would it just be calculated on the 31st  as 3.75% of £15,000 which would give £562.50 or do they have a more complex way of calculating interest taking the value of the account over the whole year into consideration?

Thanks in advance for any advice.

lindabea

Interest is calculated on a daily balanced; so the £5000 deposit that you made on 01/10 will only be earning interest from that date ie roughly speaking 2 months whereas the original 10K will earn a full year's interest.  Total interest added to your account will be in the region of £437.50

NX4737

francoghezzi said:

How on earth can you ask someone to give you interests on something that doesn't exist? Interests are calculated daily, so you will have your portion of 3.75% on £10K till 30/09 and your portion on 15K from 1/10. The extra £5000 might generate an extra £45 ish in interests that you can add up to the £375 ish created by the £10k taking the total, give or take, to around £420

What a friendly welcome, I didn't ask for interest on something that doesn't exist, I was asking about how it was calculated!

lindabea

Correction - It's 3 month's worth of interest not 2 on the 5K as I mis-read your post. Read as 1st Dec not 31st. So total interest will be in the order of £468.75

enthusiasticsaver

Interest is calculated daily.  So you will get 3.75% on your £10k for the whole year and 3.75% on the additional £5k for the period 1 October to 31 December. 

francoghezzi

NX4737 said:

francoghezzi said:

How on earth can you ask someone to give you interests on something that doesn't exist? Interests are calculated daily, so you will have your portion of 3.75% on £10K till 30/09 and your portion on 15K from 1/10. The extra £5000 might generate an extra £45 ish in interests that you can add up to the £375 ish created by the £10k taking the total, give or take, to around £420

What a friendly welcome, I didn't ask for interest on something that doesn't exist, I was asking about how it was calculated!

That's not what you wrote. Anyway if I sounded not friendly please accept my apologies.

enthusiasticsaver

francoghezzi said:

How on earth can you ask someone to give you interests on something that doesn't exist? Interests are calculated daily, so you will have your portion of 3.75% on £10K till 30/09 and your portion on 15K from 1/10. The extra £5000 might generate an extra £45 ish in interests that you can add up to the £375 ish created by the £10k taking the total, give or take, to around £420
No one will ever pay you interests on money not yet deposited. 
£1000 at 3.75% interest gives £37.5 a year, that means, roughly £3.12 a month. The extra £5000 will add up £3.12x5 every month. Total monthly: £15.6 . Provided you leave the money untouched till the end of December you will get an extra £ 15.6 x 3. You do the math

I do  not dispute your answer but I think you could have been a bit kinder in your response especially to a newbie.

francoghezzi

enthusiasticsaver said:

francoghezzi said:

How on earth can you ask someone to give you interests on something that doesn't exist? Interests are calculated daily, so you will have your portion of 3.75% on £10K till 30/09 and your portion on 15K from 1/10. The extra £5000 might generate an extra £45 ish in interests that you can add up to the £375 ish created by the £10k taking the total, give or take, to around £420
No one will ever pay you interests on money not yet deposited. 
£1000 at 3.75% interest gives £37.5 a year, that means, roughly £3.12 a month. The extra £5000 will add up £3.12x5 every month. Total monthly: £15.6 . Provided you leave the money untouched till the end of December you will get an extra £ 15.6 x 3. You do the math

I do  not dispute your answer but I think you could have been a bit kinder in your response especially to a newbie.

I already apologised with the newbie. I will cancel my comment and go back to my unkindly way of living

dsquared22

Also the interest rate on that account has changed through the year. So daily interest will be calculated not only on the amount on any given day but on the interest rate on that day. As interest rates have escalated since end Dec'22 the average over the whole year will be less than 3.75%

Albermarle

If you think about it calculating the interest rate daily is the only way it can work, as you can add and withdraw from the account at any time and as many times as you want. Plus as mentioned above the rate changes sometimes as well.

As a bit of friendly advice, keeping £15K in a relatively poor interest rate account is not the best thing to do.
Some other providers are offering better rates than that for easy access accounts, and better still for fixed term/rates.
If you are likely to need/spend the money soon then it is not really an issue, but if it is likely to be in there for a while then you may wish to consider moving it.