Savings account - monthly interest?

Hosskins

I currently do most of my spending on a 0% credit card, putting an equivalent amount in my savings account in order to accrue interest and pay the card off once the 0% period ends in January.

However, my Smile savings account only pays interest once a year, in April, which is not much good as obviously I'll have withdrawn the money to pay off the card by then.

So my question is where would my money best be placed in the meantime? Do some accounts pay interest monthly or would I be better off putting it in some kind of bond? I shouldn't need to make any withdrawals before January but I will be paying into the account fairly regularly if that has any bearing.

If anyone can advise me on this I would be very grateful. Thanks.

IWasWondering...

Barclays do a savings account that pays interest monthly.

joshm_2

lots of accounts pay monthly interest with instant access, the most obvious/headline grabbing one being kaupthing edge. cahoot do one too if you prefer a uk bank (cahoot = abbey). barclays interest rates are very poor in my opinion (as is their customer service if the isa is anything to go by).

Baldur

See Moneyfacts monthly interest 'best buys' HERE.

chesky369

Yes, do check the best buys as above - I can't imagine why anybody should recommend Barclays of ALL accounts. A huge amount of banks and building societies do monthly interest, which I myself prefer, so it's more a question of individual choice.

RayWolfe

Hosskins wrote: »

However, my Smile savings account only pays interest once a year, in April, which is not much good as obviously I'll have withdrawn the money to pay off the card by then.

You seem not to understand that your money is earning interest each day that it is in your savings account. It does not matter whether the interest is monthly, annually or any other way. You will get interest at your interest rate divided by 365 for every day. You will get the interest at the end of the interest paying period OR when you close the account.
Therefor unless you need to use the interest each month, there is no benefit to monthly interest.

cheeks

Sorry to be dim, but i thought that if you were paid interest monthly it was better than annually because then you are earning interest on the interest?

CLAPTON

cheeks wrote: »

Sorry to be dim, but i thought that if you were paid interest monthly it was better than annually because then you are earning interest on the interest?

The AER of an acount takes the frequency of payments into account so that
if 2 accounts have the same AER but one pays monthly and one pays yearly then after 12 months you will have the same interest in both a/cs.

If the 'simple ' interest of two accounts is the same and one pay monthly and one yearly then after a year you will have more interest in the monthly paying a/c

(assuming monthly interest is reinvested.)

Hosskins

Thanks to everyone for their replies to this.

So RayWolfe (or anyone else), in April I still earn interest on the money I had in January, even if it is all gone by then? It's not calculated on year-end balance or anything like that?

Apologies if this is a daft question but it's not something I have had to give any thought to before.

CLAPTON

Hosskins wrote: »

Thanks to everyone for their replies to this.

So RayWolfe (or anyone else), in April I still earn interest on the money I had in January, even if it is all gone by then? It's not calculated on year-end balance or anything like that?

Apologies if this is a daft question but it's not something I have had to give any thought to before.

you earn interest based on the daily balance ... but its paid out at the year end even if the balance at the year end is zero.