Savings interest rate help please!

pop_123

Hi, so I opened a children's savings account which had an interest rate of 5.50% for 12 months, interest paid on maturity of the account. It has just matured and I can't figure out if I'm going wrong somewhere (maths isn't my strong point!) There was £770 after 12 months and they've paid £22 interest? Tried a calculator online which suggests it should be a lot more than this. Any help appreciated please as I can't get my head round it! Thankyou 😊 

What_time_is_it

Was this a regular savings account? If so, then £22 sounds about right. e.g. Putting away about £65 a month over the course of a year.

Ed-1

pop_123 said:

Hi, so I opened a children's savings account which had an interest rate of 5.50% for 12 months, interest paid on maturity of the account. It has just matured and I can't figure out if I'm going wrong somewhere (maths isn't my strong point!) There was £770 after 12 months and they've paid £22 interest? Tried a calculator online which suggests it should be a lot more than this. Any help appreciated please as I can't get my head round it! Thankyou 😊 

If there was £770 in the account for 12 months then you'd get 770 x 0.055 interest but interest is accrued daily so whatever is in the account at the end of each day gets 0.055 divided by 365 

pop_123

What_time_is_it said:

Was this a regular savings account? If so, then £22 sounds about right. e.g. Putting away about £65 a month over the course of a year.

Ah ok thanks I didn't realise this is how it worked, I assumed it would be on the total at the end! 

pop_123

Ed-1 said:

pop_123 said:

Hi, so I opened a children's savings account which had an interest rate of 5.50% for 12 months, interest paid on maturity of the account. It has just matured and I can't figure out if I'm going wrong somewhere (maths isn't my strong point!) There was £770 after 12 months and they've paid £22 interest? Tried a calculator online which suggests it should be a lot more than this. Any help appreciated please as I can't get my head round it! Thankyou 😊 

If there was £770 in the account for 12 months then you'd get 770 x 0.055 interest but interest is accrued daily so whatever is in the account at the end of each day gets 0.055 divided by 365 

Thankyou this is helpful, I wasn't aware this was how they worked it out! 

friolento

pop_123 said:

What_time_is_it said:

Was this a regular savings account? If so, then £22 sounds about right. e.g. Putting away about £65 a month over the course of a year.

Ah ok thanks I didn't realise this is how it worked, I assumed it would be on the total at the end! 

You wouldn’t expect to pay interest on money you haven’t borrowed, would you? In the same vein, you can’t expect to get interest paid on money you have not deposited 

The MSE Regular Savings calculator can help you work out your interest https://www.moneysavingexpert.com/savings/regular-savings-calculator/

jimjames

pop_123 said:

What_time_is_it said:

Was this a regular savings account? If so, then £22 sounds about right. e.g. Putting away about £65 a month over the course of a year.

Ah ok thanks I didn't realise this is how it worked, I assumed it would be on the total at the end! 

You were paid interest on the total at the end. You were also paid interest on the total at the start. The overall average amount in the account was somewhere in between so if you use that as your amount it will probably come out somewhere close to the actual interest received.