Ulster bank interest loyalty save - compound or not .

shahpur

can anyone please help , I opened a Ulster 5.2%  savings account around 6 weeks ago and a couple of days back I  checked in to see how much I had earnt in interest but nothing was showing so I phoned  the bank.

The person I spoke to on the phone said that the interest is calculated daily but the money earnt is put into a "pot" which is paid out at the end of the year or when the account is closed - does this mean the funds are not compounded ?


A bit confused as I have other accounts ( Zopa etc  ) and am use to seeing the interest land in the account monthly and the compound . 

thanks

allegro120

shahpur said:

can anyone please help , I opened a Ulster 5.2%  savings account around 6 weeks ago and a couple of days back I  checked in to see how much I had earnt in interest but nothing was showing so I phoned  the bank.

The person I spoke to on the phone said that the interest is calculated daily but the money earnt is put into a "pot" which is paid out at the end of the year or when the account is closed - does this mean the funds are not compounded ?


A bit confused as I have other accounts ( Zopa etc  ) and am use to seeing the interest land in the account monthly and the compound . 

thanks

In my understanding the interest is compounded and paid annually on the first business day of January.

eskbanker

The interest is compounded but only every year.

For accounts that do this, the AER is the same as the gross interest rate, but for accounts paying interest more regularly, e.g. monthly, the gross rate (used to determine the interest actually added) is lower than the AER in order to recognise the impact of compounding monthly.

TLDR; you'll receive the 5.2% AER figure you signed up to!

flaneurs_lobster

It's usual for savings accounts that pay interest annually not to show the interest earned to date. 

shahpur

thanks for all the comments , so should I receive amount of interest as if the interest was paid into the account monthly?

RedImp_2

shahpur said:

thanks for all the comments , so should I receive amount of interest as if the interest was paid into the account monthly?

Well you’ll get 5.2% of what you deposited if that’s what you mean.
If it was paid monthly the rate applied is lower to account for the compounding as you refer to it but at the end of the year is the same

shahpur

RedImp_2 said:

shahpur said:

thanks for all the comments , so should I receive amount of interest as if the interest was paid into the account monthly?

Well you’ll get 5.2% of what you deposited if that’s what you mean.
If it was paid monthly the rate applied is lower to account for the compounding as you refer to it but at the end of the year is the same

thanks ,  was just confused when the bank said the interest was put in a pot and paid out at the end of the year - 

vince123

I've been looking at the Ulster bank Loyalty Saver account, and although I understand the interest is paid annually, I can't find anything about what happens if you take money out before the annual interest payment date.

Can anyone confirm please?

eskbanker

vince123 said:

I've been looking at the Ulster bank Loyalty Saver account, and although I understand the interest is paid annually, I can't find anything about what happens if you take money out before the annual interest payment date.

Can anyone confirm please?

As with pretty much every other savings account, interest is calculated on daily balances, regardless of the frequency of being paid.

So you'll still be paid interest on the scheduled date, but it'll be lower than if you hadn't withdrawn some money, or if you empty and close the account then interest would be added to the closing balance.

flaneurs_lobster

vince123 said:

I've been looking at the Ulster bank Loyalty Saver account, and although I understand the interest is paid annually, I can't find anything about what happens if you take money out before the annual interest payment date.

Can anyone confirm please?

You will continue to earn 5.2% on any monies left in the account.

gravel_2

vince123 said:

I've been looking at the Ulster bank Loyalty Saver account, and although I understand the interest is paid annually, I can't find anything about what happens if you take money out before the annual interest payment date.

Can anyone confirm please?

Interest accrues daily based on the amounts in the account that day. It doesn't matter what money is in there at the start or end of the year.

Easy/instant access accounts are flexible and dynamic. It's not that you deposit £10,000 day one, leave it for a year and receive £520 for the privilege (that's more akin to a fixed rate account). You can withdraw and deposit as much as you like and interest (calculated daily) will be paid at the appropriate amount on the anniversary of the account OR if you close the account.