How is interest calculated on savings accounts?

supersezzie

Hi Guys,

I wondered if anyone can help me with recommendations for savings accs for what I need. I have a graduate od to pay off but it's interest free until oct, so it's occurred to me that just for those few months over summer, I might be able to earn some interest by storing my wages in a high interest savings acc and moving them back just in time for paying the bills. Does anyone know if there is an instant access acc that would work for that, that doesn't require wages or anythnig to be paid directly into it?

I'm hoping someone can explain how interest is calculated on these accounts, as I think I would need one that calculated it on the daily balance or something, because if they only look at the balance on a specific day per month, they might count it after I have had to take the money out again?

Any advice on whether this is a futile plan and if there is a good account to do this would be great.

Thank you

Lokolo

All bank accounts calculate on a daily basis but they will pay the 'invisible' interest monthly or annually.

There are plenty of savings accounts out there.

http://www.moneysavingexpert.com/savings/savings-accounts-best-interest for them

supersezzie

Ahh, thanks for that. So does that mean that in any savings account, (as long as interest is done daily) I will earn some interest, even if it fluctuates between having nothing in it and being in credit every month? I'm off to look up savings accounts!!

Lokolo

Yes thats right. But you may not get interest for a year. (usually paid on day you open the account)

supersezzie

Cool, thanks! I wish I had got my act together sooner!

Milarky

Lokolo wrote: »

Yes thats right. But you may not get interest for a year. (usually paid on day you open the account)

Or else close the account at a time to suit you (which nearly always results in the interest to date being paid out)

LittleVoice

Most savings accounts have some minimum sum (may be £1, £500 or £1K). Check that out as you would have to close the account if it were to go below the minimum.

Also be wary of accounts which pay no interest or a very low rate if you make a withdrawal in any particular month. Timing would be important for withdrawals in that case.

supersezzie

Cool, thanks everyone for your advice. I've opened an ING account cos the rate looks good (over 6% for the first year) and the interest is paid monthly, which is a big plus for me cos I want the money sooner rather than later! Also, it says no penalties for transactions in or our so I'm hoping there's no hidden catches. Thanks everyone for your advice