The way we calculate your interest depends on whether it is paid into your account monthly or annually.
Interest is paid monthly for the Chip Cash ISA, Chip Easy Access Account, and Chip Instant Access Account. For the Smart Cash ISA, interest is paid annually on your account anniversary.
Interest paid monthly
Interest is paid monthly in the Chip Cash ISA, Chip Easy Access Account and Chip Instant Access Account.
We calculate your interest daily, which means it's based on your balance at the end of each day. Here's how it works using a simple example.
Let's say you have a balance of £10,000 for a whole month, with a rate of 4.50% AER (this would be 4.41% gross) for the entire time.
Annual interest: First, we calculate the interest you'd earn in a full year. The gross rate is an annual rate, which means we need to break it down correctly to get the monthly interest figure. In this case, the annual interest earned would be £441.
Daily interest: Next, we figure out your daily interest by dividing the annual amount by 365. This is because your interest is calculated every day, so we need to know the daily rate. This would give you a daily interest payment of around £1.21.
Monthly interest: Finally, we multiply that daily amount by the number of days in the month to get your total interest payment. For example, if the month has 31 days, you would receive £37.45.
Interest paid annually
Interest is paid annually in the Smart Cash ISA.
We calculate your interest daily, which means it's based on your balance at the end of each day—but it’s paid into your account once a year. Here’s how it works using a simple example:
Let’s say you have a balance of £10,000 for a full year, with a rate of 4.50% (gross/AER) for the entire time.
Why gross = AER: Because interest is only paid once a year, there’s no compounding within the year. That means the gross rate (the simple annual rate) and the AER (which includes compounding) are the same.
Annual interest: First, we calculate the total interest you’d earn over a full year. In this case, that would be £450.
Daily accrual: Next, we break this down into a daily amount by dividing by 365, since interest is calculated every day. This gives a daily accrual of around £1.23.
Annual payout: Although interest is calculated daily, it isn’t added to your balance each day. Instead, these daily amounts are accumulated, and the total (£450 in this example) is paid into your account on your account anniversary.
Need further help?
If you have any further questions, please get in touch with our support team using the in-app chat. This can be found in the Contact Us section on the Profile tab.