A & L Maximum in online saver or not ?

smudgie2

Today I have received the interest on the maximum savings of 25K in the A & L Online saver Issue 1. Have already bounced the interest out to another account as a telephone call to A & L confirmed what many of you have already said that any amount above the max of 25K earns no interest at all.

So..... the question is -

If, as I understand the interest is calculated and added daily and paid annnually on Sept 1st, would I achieve a better return in the future by reducing the amount in my account, by say 1 or 2K so that the interest paid is added and becomes 'compound interest' rather than the 'simple interest' received today which can earn nothing as it immediately takes the total above 25K ????

Will admit to having been on a very steep learning curve during the last couple of years, and the learning continues ! Apologies if I am just talking nonsense. Would welcome your thoughts. Thanks

Stonk

When they say "interest is calculated daily and paid annually", what they mean is that at the end of the year they run through each day of the year, look at the balance and interest rate on that day, and work out how much interest is payable for that day. All the little bits of interest are summed and added to the account on the final day. Your balance doesn't gradually creep up during the year during the calculation process - it will be £25K for all the days being considered.

It's important that it is "calculated daily", because otherwise if your balance changed then it might have no immediate effect (like annually calculated mortgage interest - how do they get away with that still?!).