Maths / Interest question

retiredbanker1

Hope you can help - if I put £45000 in a Fixed Rate (1yr)ISA  at 4.61% how much interest should I get at maturity ( No withdrawals or monthly interest) ?

JGB1955

£2074.50  

boingy

As above, but it might vary by a few quid because 1 year fixes are sometimes not exactly one year, depending upon when you make the deposit. Check their T&Cs.

badger09

retiredbanker1 said:

Hope you can help - if I put £45000 in a Fixed Rate (1yr)ISA  at 4.61% how much interest should I get at maturity ( No withdrawals or monthly interest) ?

With caveat as above post. 

45000 x 4.61/100 = 2,074.5 

Are you really a retired banker?

SnowMan

And to be precise, if it is an exactly one year fixed rate account maturing now, it will depend on the provider's treatment of interest in a leap year, since some of that one year period falls within a leap year.

For example if the provider pays interest on each day in the leap year 2024 at 1/366th of the annual rate and the account was maturing today, and interest is paid only on maturity, then interest might be using the method most commonly used

45,000 x (231/366 + 134/365) x 0.0461 = £2,070.91 

MattMattMattUK

Just a quick point, but is this an ISA transfer? You cannot put £45k into a new ISA in one year.

clairec666

MattMattMattUK said:

Just a quick point, but is this an ISA transfer? You cannot put £45k into a new ISA in one year.

I also noticed the rate is 4.61% so I'm guessing it's an account that they've had open for a while... unless anyone knows of any current fixes at 4.61%? (If so I'd like to know where!)

retiredbanker1

Thank you for all of your replies - I was expecting £2074.50
I have a legitimate reason for asking the question my ISA is due to mature next week and they have calculated the closing interest to be £2053.08

Yes I am a retired banker! I just wanted to check that my old style maths had not been replaced by something digital LOL

In fact I was expecting the interest to be even higher because they pay annual interest in August - and I deposited the money in May 2024. So I got £358 in August which I assume would be compounded until maturity this month.

I can only think that there is some kind of hidden charge when I withdraw the interest and some capital when this is taken out on maturity; rest is then reinvested for a further 12 months (4.1% this year).
I am aware that my provider charges 60 days interest on withdrawals but should any charge actually show as a debit on my ISA account?

The only conclusion I have is that they deduct any ''charges'' from following year's interest but not show this at all on the account. I do not think I should be paying anything to withdraw on maturity.

Any thoughts please? I won't name them for now.

eskbanker

It's presumably Virgin Money - was the money definitely in the account for exactly a year from deposit to maturity dates?

SnowMan

If you can give us the precise dates of the initial deposit of £45,000, the interest date in August, the exact interest payment in August and the exact maturity date it should be possible to check the interest payable. 

If the £45,000 was paid in on 30th May and the interest paid on 1st August and they used 1/365 per day interest in leap years then the August interest would be about £358.06. 

And if the account matures next Friday then that would give total interest of about £2,053. 

And so it would be down to the account running for slightly less than a year.

retiredbanker1

eskbanker said:

It's presumably Virgin Money - was the money definitely in the account for exactly a year from deposit to maturity dates?

Yes it was - no withdrawals until date of maturity then what was left put in a new 1yr fix