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Difference in interest monthly or at maturity
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stoneman
Posts: 4,549 Forumite
If I was signing up for a 1 year fix, is there a difference if I choose one that adds the interest monthly or one that does it all at the end of the term.
The common law of business balance prohibits paying a little and getting a lot. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.
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There shouldn't be any difference in the gross interest paid, which you can validate by comparing the AER for each.
Tax may make a difference, in that annual interest will all be paid in one tax year, whereas monthly will spread it across two....2
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