For example:
Over 1 year, putting £50 a month in giving a total of £600 at 6%
Can you explain how the interest is calculated over the year?
Cheers.
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Explain to me how interest is calculated on savings!
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Posted 2 years ago #
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It's usually worked out on the daily balance, so you'll get a month at £50 balance, then the next month on the £100 balance, the next month on £150 balance etc. In other words you get loads less than you expect!!
Posted 2 years ago # -
Depends on the account. Usually, it'll be monthly. So, on average, your balance will be £300 (i.e. starting at zero and ending at £600). 6% of £300 is £18. So , you'll get £18 of interest (plus a few pennies if the interest is paid monthly as the capital will slowly rise through the year and you'll be getting interest on the interest). But - like I say - it depends on the account, some only pay at the end of the year.
Posted 2 years ago # -
as druidh: look for "interested calculated daily, paid monthly" or "interest calculated daily, paid annually"
if it's calculated daily it's each day's balance x 6%/365.
How often it's paid will affect whether you're earning interest on what you put in, or on what you put in plus accumulated interest.
Posted 2 years ago # -
You've missed out that it's compounded if it's calculated monthly so you get interest on any previous months interest.
Posted 2 years ago #
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