How can I calculate if my monthly ISA interest is correct?

badmemory

The formula is   

capital at start of period multiplied by days in the period divided by no of days in the year, then multiplied by the interest rate divided by 100.

In a leap year some banks are using 366 days although most use 365.

whalemoney

refluxer said:

AFAIK, Plum have only been offering cash ISAs in the last year or two so if you've got nearly £80k in a Plum ISA, then presumably a big proportion of that has been transferred in and Plum pay a lesser interest rate for transfers (currently 3.79%, but it's possible you may have a different rate if there are different issues or versions of this account) - could that explain the discrepancy ?

that could be why then.  20k put in last financial year, 20k this financial year and then the rest was transferred from other banks. Very annoying though that there's no mention of the different interest rate that half of my savings is getting.  It clearly says in the app that this ISA account is earning 4.68%

jay1804

Why don't you transfer your ISA to Trading212 and earn 4.9% on all your money paid daily. 

friolento

whalemoney said:

refluxer said:

AFAIK, Plum have only been offering cash ISAs in the last year or two so if you've got nearly £80k in a Plum ISA, then presumably a big proportion of that has been transferred in and Plum pay a lesser interest rate for transfers (currently 3.79%, but it's possible you may have a different rate if there are different issues or versions of this account) - could that explain the discrepancy ?

that could be why then.  20k put in last financial year, 20k this financial year and then the rest was transferred from other banks. Very annoying though that there's no mention of the different interest rate that half of my savings is getting.  It clearly says in the app that this ISA account is earning 4.68%

Very sneaky, and it would be enough reason for me to initiate an ISA transfer immediately, to somewhere like Trading 212, Moneybox or even Paragon. Be aware that your interest in Moneybox is not FSCS protected until it gets credited to your account on anniversary.

As you are near the FSCS limit, you might want to open more than one ISA now, to secure rates which might not be available in the future. Watch out for pitfalls, such as introductory rates which expire after a year etc. You may not be able to avoid these but you should be aware.

Also check the Plum condition “….if kept for 12 months….. “ before you transfer-out your current year’s contributions. You don’t want to be stung twice.

I did pass on the Plum ISA because they do make itheir very odd rate for transfers-in clear in their ISA info and most of my ISA balance comes from transfers.

whalemoney

Thanks for the replies everyone.  Switching to T212 was my plan a while ago but they weren't taking transfers at the time.

@friolento
please can you elaborate on this?  I don't understand what this means
Also check the Plum condition “….if kept for 12 months….. “ before you transfer-out your current year’s contributions. You don’t want to be stung twice."

refluxer

whalemoney said:

please can you elaborate on this?  I don't understand what this means
Also check the Plum condition “….if kept for 12 months….. “ before you transfer-out your current year’s contributions. You don’t want to be stung twice."

To get the full rate including bonus, you need to keep the new subscriptions in the ISA for a full 12 months, otherwise you'll get the same lower rate you get on your transferred funds (3.79%) if you withdraw or transfer out before then. 

whalemoney

@refluxer I still don't understand that though.  I'm reading that as Plum are threatening that "if you take all your money out within a year of opening the account, then we're going to lower the interest rate"... lower it on what?  There will be obviously be no money in the account as I'll have taken it all out!

Let's say I opened the account only 6 months ago, and let's assume they've been paying me the upper bonus rate on a monthly basis.  When I transfer the money out to a different provider, I don't understand the relevance of a lower rate?  They will no longer have any of my money, so isn't that a bit of an empty threat of them to make?  They can't impose an interest deduction on something that no longer exists?

AmityNeon

whalemoney said:

@refluxer I still don't understand that though. I'm reading that as Plum are threatening that "if you take all your money out within a year of opening the account, then we're going to lower the interest rate"... lower it on what? There will be obviously be no money in the account as I'll have taken it all out!

Let's say I opened the account only 6 months ago, and let's assume they've been paying me the upper bonus rate on a monthly basis. When I transfer the money out to a different provider, I don't understand the relevance of a lower rate? They will no longer have any of my money, so isn't that a bit of an empty threat of them to make? They can't impose an interest deduction on something that no longer exists?

You are only being paid the basic rate of interest on a monthly basis. The bonus interest only applies if the account is kept for 12 consecutive months, so it's a bonus (of addition) if you fulfil the criteria, not a penalty (of reduction) if you do not. Even if it were a penalty, Plum could still subtract bonus interest from the withdrawn/transferred amount (like withdrawal penalties equal to a certain number of days' interest from fixed ISAs).

whalemoney

AmityNeon said:

whalemoney said:

@refluxer I still don't understand that though. I'm reading that as Plum are threatening that "if you take all your money out within a year of opening the account, then we're going to lower the interest rate"... lower it on what? There will be obviously be no money in the account as I'll have taken it all out!

Let's say I opened the account only 6 months ago, and let's assume they've been paying me the upper bonus rate on a monthly basis. When I transfer the money out to a different provider, I don't understand the relevance of a lower rate? They will no longer have any of my money, so isn't that a bit of an empty threat of them to make? They can't impose an interest deduction on something that no longer exists?

You are only being paid the basic rate of interest on a monthly basis. The bonus interest only applies if the account is kept for 12 consecutive months, so it's a bonus (of addition) if you fulfil the criteria, not a penalty (of reduction) if you do not. Even if it were a penalty, Plum could still subtract bonus interest from the withdrawn/transferred amount (like withdrawal penalties equal to a certain number of days' interest from fixed ISAs).

So if I'm paid a basic rate every month, how would they ever pay the bonus?  None of this makes any sense.

AmityNeon

whalemoney said:

AmityNeon said:

whalemoney said:

@refluxer I still don't understand that though. I'm reading that as Plum are threatening that "if you take all your money out within a year of opening the account, then we're going to lower the interest rate"... lower it on what? There will be obviously be no money in the account as I'll have taken it all out!

Let's say I opened the account only 6 months ago, and let's assume they've been paying me the upper bonus rate on a monthly basis. When I transfer the money out to a different provider, I don't understand the relevance of a lower rate? They will no longer have any of my money, so isn't that a bit of an empty threat of them to make? They can't impose an interest deduction on something that no longer exists?

You are only being paid the basic rate of interest on a monthly basis. The bonus interest only applies if the account is kept for 12 consecutive months, so it's a bonus (of addition) if you fulfil the criteria, not a penalty (of reduction) if you do not. Even if it were a penalty, Plum could still subtract bonus interest from the withdrawn/transferred amount (like withdrawal penalties equal to a certain number of days' interest from fixed ISAs).

So if I'm paid a basic rate every month, how would they ever pay the bonus? None of this makes any sense.

If you keep the account for 12 consecutive months then you'll get a bonus interest payment (covering the whole 12 months) on top of the basic monthly payment. It's entirely possible to receive interest on the same funds for the same period multiple times.