Anyone got a Moneyfarm Cash ISA and checked their daily interest?

snozdop

Currently the Moneyfarm Cash ISA has a base interest rate of 3.80% AER "calculated daily and paid out daily", plus a bonus rate of 0.52% AER "calculated daily and paid out after 12 months", making a total of 4.32% AER ("Sum of base and bonus interest").

All good so far.

Moneyfarm however, are not paying me the base interest rate daily. They are paying me exactly the base rate minus the bonus rate daily. i.e. (3.80% - 0.52%) =3.28%.

I know with compounding the daily interest paid isn't exactly (balance × 3.80%) ÷ 365 days – it'll be slightly less, but what I'm getting is considerably lower.

Anyone else seeing this with their Moneyfarm Cash ISA?

Isthisforreal99

Looking at the T&C's the boosted amount is paid as a lump sum 'no later than the month following the anniversary of your first deposit'

MeteredOut

https://forums.moneysavingexpert.com/discussion/comment/81974287#Comment_81974287

OP is saying they're getting 3.8% including the bonus rate, so when the bonus is paid, they'll only have gotten 3.8% not 4.32%

OP, if you share ISA balance and daily interest calculated, others might be able to work it out, but have you contacted Moneyfarm and asked them?

snozdop

https://forums.moneysavingexpert.com/discussion/comment/81974287#Comment_81974287

That's correct, but as I mentioned, I'm not even getting the 3.80% AER base rate daily. I'm getting the base rate minus the bonus (3.80% - 0.52% = 3.28%), not (4.32% - 0.52% bonus = 3.80%)

Isthisforreal99

https://forums.moneysavingexpert.com/discussion/comment/81974326#Comment_81974326

Sorry I misread the original post, but as above some figures for context would be good.

snozdop

https://forums.moneysavingexpert.com/discussion/comment/81974300#Comment_81974300

Ok, so on a balance of £36700 I'm getting £3.29 paid daily (well, not paid daily, because even though they clearly state it's paid daily, it's actually not).

£36700 × 3.80% base rate ÷ 365 days = £3.82 per day. Taking into account the compounding, I should be getting around £3.75 daily.

I worked out what they're actually paying me is £36700 × (3.80% base rate - 0.52% bonus) ÷ 365 days = £3.29 per day

I did ask them, but their explanation doesn't add up. They just said "the 3.80% AER is a compounded rate. To ensure you reach 3.80% over a full year, the daily rate is mathematically set slightly lower". Which contradicts what it say's on their website and the customer dashboard. 3.28% isn't "slightly lower" than 3.80%, and the maths doesn't add up anyway - it's a difference of 46p per day. It's misleading and means you can't verify what their marketing say's.

snozdop

Here's a calculator that takes into account the daily compounding - most annual interest calculators just use the AER divided by 365 days, which is incorrect for each individual day's compounded interest.

https://www.jools.me/compound-interest/