Moneybox CASH ISA Daily Interest wrong?

P1Fanatic

Anyone else seeing their Daily Interest (Today's interest under Wealth Tab) incorrect? Mine was always correct. It dropped to 4.78% on May 29th as communicated and my daily rate was still correct and matching my own calculation (using BALANCE*(0.0478/365) ). Last couple of days its showing 18p per day lower again with no change in balance, no withdrawals etc. Thought it might be a typo but todays total balance matches May statement + the lower rate. I've pinged Moneybox CS but curious if others noticed similar.

slinger2

This probably relates to the change from annual to monthly interest payments.

When interest is paid monthly there is a "compound interest" effect which needs to be taken into account. You will get a slightly lower interest rate (called the "gross" rate) to take account of this. With current interest rates it's roughly 0.1%. So you might now get an annual gross rate of 4.68% but with compound interest taken into account you'll end the year with 4.78% more in the account (4.78% is the AER in this example).

P1Fanatic

slinger2 said:

This probably relates to the change from annual to monthly interest payments.

When interest is paid monthly there is a "compound interest" effect which needs to be taken into account. You will get a slightly lower interest rate (called the "gross" rate) to take account of this. With current interest rates it's roughly 0.1%. So you might now get an annual gross rate of 4.68% but with compound interest taken into account you'll end the year with 4.78% more in the account (4.78% is the AER in this example).

Thanks. I thought there maybe something my basic grasp of interest rates was missing and that makes sense. Any idea how I would calculate that gross rate daily interest?

slinger2

If it was me I'd go for (1.0478^(1/12)-1)*12 = 4.6784% for the gross annual rate, 4.6784%/365.25 daily. Whether they're doing the same calculation I wouldn't know. Annoying that they don't tell you the gross rate.