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Why is the interest on my ISA lower in some months than others?

8 replies

Roundaboot · 22/02/2024 17:43

I feel a bit daft asking this as I generally consider myself quite good with money...

I set up a cash ISA with my bank last year. It's a fixed rate one year ISA and I chose to have interest paid monthly.
I put a lump sum into it and since then have been paying in a set amount each month and also put it another lump sum. So over the past few months, the amount in the ISA has been increasing. However, I've noticed that the monthly interest payments, although increasing over time, are lower in some months than in the previous month, despite there being more in the account overall.

Would someone who knows please explain to me how the interest is being calculated here?

OP posts:
ChessieFL · 22/02/2024 17:47

It might be calculated on a daily basis and some months have more days in them than other months.

isthewashingdryyet · 22/02/2024 17:49

Wot @ChessieFL said.

had to point this out to OH this morning. He is not looking forward to Februarys interest now.

Legacy · 22/02/2024 17:52

Are you sure it's a fixed rate ISA? Who is it with?
You say you are paying into a monthly, but you can normally only pay into a fixed rate ISA within the first 30 days?

You need to check the T&Cs for your ISA, but I imagine your interest is being calculated daily and added to the account monthly, but some months have more days?

Roundaboot · 22/02/2024 18:03

Calculated daily makes perfect sense! Why didn't I think of that?! Thank you!

OP posts:
Legacy · 22/02/2024 18:07

I'm still interested to know who the provider is please, OP, as I haven't heard of a FRISA which lets you pay in monthly after opening?

DelilahBucket · 22/02/2024 18:09

I think the OP probably means it's an instant access ISA but the rate is guaranteed for one year.

Roundaboot · 22/02/2024 21:31

DelilahBucket · 22/02/2024 18:09

I think the OP probably means it's an instant access ISA but the rate is guaranteed for one year.

No, it's a 1 year fixed rate ISA with Lloyd's Bank.

OP posts:
elkiedee · 23/02/2024 02:40

I just looked it up and they do offer a 1 year fixed rate ISA which allows you to add to it. But the rate if you open one now isn't the best - 4.15% - if variable rates drop a bit (and they are beginning to fall) it may look better but the penalties for withdrawing or transferring this during the year are steep on this one.

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