how much interest will i be paid?

moomi

if I open a direct isa with ns&i on monday & stick the max £3000 in there? I believe the rate is 6.05%. Plan is to add another £3600 ome April & new tax year.

ManAtHome

£181.50 a year - (3000 * 6.05) / 100 is the way to work it out. Gets a bit tricky when rates are changing all the time, but you could work the daily interest by dividing again by 365.

moomi

so even if I put the max amount in 2 days before the end of the tax year I'd get the same?

how do you work out interest on a larger amount? say £20,000 at 6% gross for 1 year. basic rate taxpayer

thank you

CLAPTON

interest statements like 6.05% mean interest per annum i.e. for investing for a period of 12months.

so if you invest 3,000 a couple of days before the end of the tax year you will earn 6.05 % x 3000 = £181.50 after 12 months i.e. a couple of days before 5th april 2009.
In practice you need to consider the T&Cs of the product as some pay monthly and some at the end of the tax year or financial year or the anniversity of opening the account etc.

so you question makes no sense as you must ask
how much interest will I earn in say
1 month
6 months
1year
2 years
or whatever.

moomi

i understand now, sorry to be so ignorant! thats why some folk are on here though for help & advice, well thats why I'm on

thanking you

Mikeyorks

moomi wrote: »

so even if I put the max amount in 2 days before the end of the tax year I'd get the same?

how do you work out interest on a larger amount? say £20,000 at 6% gross for 1 year. basic rate taxpayer

6% .... means you get £6 interest for each one hundred pounds (£100) .... which is in the account for a full year.

I think it's the bit in bold .. you're missing? So if you put £3k into an (6%) ISA just 2 days before the interest is calculated ... you get just the 2 days interest .. roughly £0.98. (30 lots of £100 {at £6 for each hundred} is £180 for a full year .. divide by 365 days is £0.49 per day .... so £0.98 for 2 days)

The £20,000 works the same way. Basically £6 for each of the 200 lots of £100 you have in, for a full year, is £1,200 in interest.

nilrem_2

moomi wrote: »

so even if I put the max amount in 2 days before the end of the tax year I'd get the same?

Unless you absolutely can't do it it is better to invest money in your cash ISA as soon as you possibly can in the Tax Year this way you will obtain the best interest and tax advantage.

TBH it amazes me how many people rush to get cash in their ISA's 2 days before it closes!

RayWolfe

nilrem wrote: »

TBH it amazes me how many people rush to get cash in their ISA's 2 days before it closes!

Ditto.
My 2007/8 has been there earning me tax free interest from 6th April 2007. Sometimes there are good deals right at the end of the year, such as Barclay's ... oh well, perhaps not. :-)