I know some savings accounts pay interest monthly & some yearly. If I open an account with yearly interest & close before the year is up how is the interest (if any calulated), is the only advantage with monthly interest the extra compound interest
TIA
Tracy
Bitstring , from the wonderful person Tracy Ramsden said
You normally get 'N'/365 ths of the interest you would have got for a full year (where N is the number of days it was open). Really tacky banks give you N/366 when they can persuade themselves the year in question was (or 'would have been') a leap year.
Yes .. although most institutions offer a lower rate for monthly. i.e. Newcastle Net (online) was, last time I looked 3.65% monthly, or 3.8% annual. If you fire up your calculator you'll discover that the 3.8% is actually a better deal right now.
With monthly interest you can spend the interest sooner too, should you need to. You can also fiddle about with which tax years interest shows up in, in case you are going from being a 40% tax payer to a non tax payer, or vice versa.
cheers.
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