First Direct 7% con

danny13579

surreysaver said:

There's not going to be any compound interest because it doesn't pay interest monthly 

Is this not compound interest? 

ColdIron

danny13579 said:

surreysaver said:

There's not going to be any compound interest because it doesn't pay interest monthly 

Is this not compound interest? 

No. Compounding only happens when interest is credited to the account and is able to compound. In this case the interest is only added at the end of the term. That's why the AER and Gross are the same

AmityNeon

ColdIron said:

danny13579 said:

surreysaver said:

There's not going to be any compound interest because it doesn't pay interest monthly

Is this not compound interest?

No. Compounding only happens when interest is credited to the account and is able to compound. In this case the interest is only added at the end of the term. That's why the AER and Gross are the same

That's rather peculiar wording from FD though, as if to imply 'interest earned on previous days' is a separate element to the account balance allowing for compounding, despite the matching rates.

danny13579

ColdIron said:

No. Compounding only happens when interest is credited to the account and is able to compound. In this case the interest is only added at the end of the term. That's why the AER and Gross are the same

Thanks, I did not know that.

AmityNeon said:
That's rather peculiar wording from FD though, as if to imply 'interest earned on previous days' is a separate element to the account balance allowing for compounding, despite the matching rates.

This is why I thought it compounded.

ColdIron

AmityNeon said:

ColdIron said:

danny13579 said:

surreysaver said:

There's not going to be any compound interest because it doesn't pay interest monthly

Is this not compound interest?

No. Compounding only happens when interest is credited to the account and is able to compound. In this case the interest is only added at the end of the term. That's why the AER and Gross are the same

That's rather peculiar wording from FD though, as if to imply 'interest earned on previous days' is a separate element to the account balance allowing for compounding, despite the matching rates.

Yes, I agree, poor wording. However the mechanics of compounding have been plain for centuries if not longer

Albert Einstein called it the eight wonder of the world

“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it."

35har1old

buster414 said:

My account matured. £300 per month x 12 so £3600 saved @ 7%.  My interest was £135 around 4% !!!!
Oh, it’s how the interest is calculated said customer support, your fault for not reading the small print. Learn from my mistake 😩

Before opening the account you are given a examples of what you will receive  at the end of term.
It also tells you how to achieve this amount if followed you should realise £136.50 on depositing £300 per month

Bigwheels1111

Every week or two this type thread comes up.

Does nobody read the T&C.

I love the T&C, FD said £136.50 interest, not the £135.38 I got this year.

I call to ask why ?.

Plus speed up transfer of funds.

I got £1.12 credit and funds moved into my account in 8/9 minutes.

Saved waiting 5 plus days for the funds.

Now stashed in my Chip 5.1% easy access isa.

Organgrinder

I'm a maths teacher and might use this as a test question.

Last Direct advertise a savings rate that pays 7% interest per annum. You are allowed to pay £250 into your account each month. John says at the end of the year he'll have earned £210 in interest. Explain why John is incorrect.

Dazed_and_C0nfused

Organgrinder said:

I'm a maths teacher and might use this as a test question.

Last Direct advertise a savings rate that pays 7% interest per annum. You are allowed to pay £250 into your account each month. John says at the end of the year he'll have earned £210 in interest. Explain why John is incorrect.

For what age group?

Primary, secondary or FE 🤔

Organgrinder

Dazed_and_C0nfused said:

Organgrinder said:

I'm a maths teacher and might use this as a test question.

Last Direct advertise a savings rate that pays 7% interest per annum. You are allowed to pay £250 into your account each month. John says at the end of the year he'll have earned £210 in interest. Explain why John is incorrect.

For what age group?

Primary, secondary or FE 🤔

Secondary.