Monthly or Annual interest

rkc

Hi
Sainsburys have a fixed 1year deal 5.25% 
Interest cannot be paid into the account, there is no compound interest.

My question
Is why would you leave it all to be paid into an account Annualy instead of Monthly then re-investeing elsewhwere?
Is there a way of knowing how much interest would be payable Monthly on £70000?

Many thanks

Slinky

70000 x 0.0525.  Divide by 366 (leap year next year). Multiply by the number of days in the month for exact figures. Otherwise it's roughly £306 a month.

Somebody may want to receive all their income in tax year 2024-5, which would be when they would receive it if paid annually. If paid monthly it may affect their tax for the current tax year.

Qyburn

Unusually in this case you'd end up with more interest if you take it monthly, assuming you put the interest into an account with a non-zero interest rate. An ideal fit for a monthly saver.

rkc

Slinky said:

70000 x 0.0525.  Divide by 366 (leap year next year). Multiply by the number of days in the month for exact figures. Otherwise it's roughly £306 a month.

Somebody may want to receive all their income in tax year 2024-5, which would be when they would receive it if paid annually. If paid monthly it may affect their tax for the current tax year.

Qyburn said:

Unusually in this case you'd end up with more interest if you take it monthly, assuming you put the interest into an account with a non-zero interest rate. An ideal fit for a monthly saver.

Thank you both for your input.........Qyburn my thoughts on the monthly payout
Slinky I caclculated it as that amount thank you confirmation and the HMRC thought someting had not considered

george4064

Qyburn said:

Unusually in this case you'd end up with more interest if you take it monthly, assuming you put the interest into an account with a non-zero interest rate. An ideal fit for a monthly saver.

Unfortunately I don’t think that is the case. I’d usually expect the gross interest rate to be stated somewhere and look something like: Annual gross 5.25% and Monthly gross 5.15%, however I couldn’t find it anywhere.

MSE explains this point here: https://www.moneysavingexpert.com/banking/interest-rates/#:~:text=The%20AER%20makes%20sure%20this,AER%20for%20both%20is%205%25.

rkc

george4064 said:

Qyburn said:

Unusually in this case you'd end up with more interest if you take it monthly, assuming you put the interest into an account with a non-zero interest rate. An ideal fit for a monthly saver.

Unfortunately I don’t think that is the case. I’d usually expect the gross interest rate to be stated somewhere and look something like: Annual gross 5.25% and Monthly gross 5.15%, however I couldn’t find it anywhere.

MSE explains this point here: https://www.moneysavingexpert.com/banking/interest-rates/#:~:text=The%20AER%20makes%20sure%20this,AER%20for%20both%20is%205%25.

Hi George
thank you for your input
was aware of lower interest rate but could not find any difference, as far as I could make out aer/gross, in their table of example it shows 5.25% and that is what it shows on the now open account.
Further more it states Interest whether annual or monthly has to be paid into another account as there is no compound interest with this account.