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isa accounts

Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
Im trying to find the best one?

Im with the abbey but theres are not great, i see this...

http://www.firstdirect.com/savings/regular-saver-isa-overview.shtml

they say 250 a month saved which is 3 grand returns 113 pound profit, but 113 is not 7% of 3 grand?:confused:


but apparently thats the best one according to this... http://www.moneysupermarket.com/isap/IsasResults.asp


How do they work out the interest? doesnt look like you can earn a great deal on any of them really?

Comments

  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    The £113 interest figure depenads on how they've calculated the interest out.

    Most low-risk savings accounts are all going to have crap rates at the moment due to the base rate being so low.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    with that 7% account, even though its an ISA, as far as I can work out they seem to be calculating the interest monthly rather than anually, which is what many banks do with these "headline" rates. So basically rather than working it out of 7% of £3000, its calculated like this.
    MONTH 1 - £250, so you work out 7% of that, add it on, (£17.50)
    MONTH 2 - £517.50, 7% Of that, etc..
    I think thats how they work it anyway, kinda like compound interest that u learn in school
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Nearly, i think you would work it out like this:

    Month One: £250 (Work out 7% which is £17.50) then divide by 12 (the amount of months in a year) = £1.45 times 12 (the amount of months this £250 will be in the account when the interest is paid out) = 17.5

    TOTAL = £267.5


    Month Two: £250 again work out the 7% which is £17.50, then divide by 12, then this time times by 11 since this £250 will only be in there for 11 months. so the interest earned on this £250 will be £17.50 / 12 = £1.45 * 11 = 16.04 so that £250 will be £266.04

    you do this for each individual £250 , each time reducing the final multiplication of the monthly interest rate, then adding the values all up at the end.

    The only way for that 7% interest rate to equate to 7% of the £3000 that you've saved is if you invest it as a lump sum £3000 in the first month.
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