Question about interest on balances

MF2027

I have perhaps a dumb question -

1. let’s say I open a cash ISA and deposit the full £20k with an account paying 4.3%
2. At the end of the year I receive the interest

3. At the start of year 2 I deposit another £20k into the same account, still at 4.3%

4. At the end of year 2, am I paid 4.3% on the entire £40k balance or just the new £20k deposit?

thank you

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/6665757/question-about-interest-on-balances

Neither, for the second year you would be paid interest on £40,860.

Unless the interest from year 1 was paid away to a different account at the end of year 1.

And that assumes the interest remained 4.3% throughout the 2 years.

molerat

Normally on the entire balance including the £860 interest added at the end of year 1 ……….. but ……….. it will all be down to the terms of the particular account.

JGB1955

Assuming that you leave the interest in the account at the end of Year 1, at the end of Year 2 you will receive interest on the whole £40,860 - i.e. an additional £1,756.

MF2027

Thanks, yes plus the interest - but specifically, interest isn’t just paid on the new deposits in the new financial year

friolento

https://forums.moneysavingexpert.com/discussion/comment/81977843#Comment_81977843

of course not.

Interest is calculated on the balance at the end of each day, and added to your ISA according to your T&Cs, usually annually or sometimes monthly.