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How is Interest calculated?

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  • 12-06-2009 1:10pm
    #1
    daveyjoe
    Registered Users Posts: 1,463 ✭✭✭


    I'm moving my banking around at the moment so I'm reviewing all my accounts.

    I have an online 30-day notice account with AIB that is currently offering me 3.23% (the rate was above 4% 6 months ago), interest on this account is paid in April and October. I'm just wondering how the interest is calculated, is it calculated on the balance that is in the account on 1st April/October? Or do they use the lowest balance that has been in your account for the previous six months? Or do they calculate your average balance over the past six months?

    One other question; if I was to give notice to withdraw all my funds now (and withdraw in 30 days), would I earn any interest come October?

    Thanks.


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    #2
    daveyjoe
    Registered Users Posts: 1,463 ✭✭✭daveyjoe


    Section 4.1 of this page states that the interest is calculated daily. This seems to suggest that if I withdrew my money now but kept my account open then I would still be paid interest in October for the last 2+ months (April, May, June). Is this correct?

    Also, do I still earn interest during the 30 days in which I have given notice to withdraw the money?

    Apologies if the answers to these questions are obvious.


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    #3
    Ogham
    Registered Users Posts: 1,844 ✭✭✭Ogham


    The vast majority - (probably all) accounts work out interest on a daily basis. The balance each day is used to calculate the daily interest.
    If you give 30 days notice to close the account I am pretty sure you would get all the interest due up to the closing date when you withdraw the money.


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