Another Santander Edge question

danny13579

nottsphil said:

mon3ysav3r said:

Thanks, both Edge accounts now open and funded.

Final question (for now!), is it best to only pay in 3,980 to leave space for the approx 20 pounds monthly interest? (assuming I have calculated that correctly), or do you let it go over 4000 (and presumably lose any interest each day until you transfer the interest out).

But you're still going to have the same issue the following month! Why don't you just do as ColdIron? 
And as for the interest, it's primary school arithmetic you should be able to do in your head..
6% of £1000 = £60 x 4 = £240 ÷ 12 = £20.

Why not just set up a standing order for £20 out each month?

This is incorrect. With £4,000 in the account for the full year, no withdrawals throughout the year, and no interest rate changes, you will never get £20 in any month.

Below is a table of the interest you get per month.

nottsphil

danny13579 said:

nottsphil said:

mon3ysav3r said:

Thanks, both Edge accounts now open and funded.

Final question (for now!), is it best to only pay in 3,980 to leave space for the approx 20 pounds monthly interest? (assuming I have calculated that correctly), or do you let it go over 4000 (and presumably lose any interest each day until you transfer the interest out).

But you're still going to have the same issue the following month! Why don't you just do as ColdIron? 
And as for the interest, it's primary school arithmetic you should be able to do in your head..
6% of £1000 = £60 x 4 = £240 ÷ 12 = £20.

Why not just set up a standing order for £20 out each month?

This is incorrect. With £4,000 in the account for the full year, no withdrawals throughout the year, and no interest rate changes, you will never get £20 in any month.

Below is a table of the interest you get per month.

You are correct, and this illustrates the difference between the gross %pa quoted (5.93) and the AER (6%) for those who are baffled by compound interest rates. Banks have to quote the AER for comparison purposes, even though monthly interest paid back into the account won't increase the yield to £240 in this particular case.

danny13579

For anyone who's interested, here's how it would look if they did allow the interest to compound, though I'm 5p out in my figures!