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newsaver
Newbie
Joined: 28 Feb 2005
Posts: 12
Cash Points ££ 202.10
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 Posted: Sun May 21, 2006 3:57 pm Post subject: Why thew difference between monthly and annual interest ? |
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Why do the same accounts pay different interest rates depending on if you take the interest monthly or annually, usually the monthly interest is always lower, is it because they have to do more admin ?
Thanks |
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Sarah
Money Manager
Joined: 16 Jul 2004
Posts: 831
Cash Points ££ 12024.38
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| Posted: Sun May 21, 2006 4:03 pm Post subject: |
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Don't worry you are getting the SAME amount of interest on both types of account 
The reason for the different advertised rates is because the monthly interest is compounded, i.e. each months interest is added to the account then next month you get interest on the interest, whereas with annual interest you only get the interest at the end of 12months so no monthly compounding, but the actual amount of interest that you recieve is the same for BOTH |
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