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How is interest calculated?
How is interest calculated?
Ryan avatar
Written by Ryan
Updated over a month ago

The Chip Instant Access Account, Chip Easy Access Account and the Chip Cash ISA all offer returns in the form of interest. Interest accrues daily and is paid monthly on the fourth working day of the following month.

To make things clearer, let's look at an example

Let's say that you have held a balance of £10,000 throughout the month where the rate has been set at 4.50% AER (variable) for the whole month. This means you would have a gross rate of 4.41%.

Firstly, we would need to calculate the interest earned annually: (£10,000/100)*4.41 = £441

Next, we need to figure out the daily accrual, to do this we would simply divide the annual interest by 366 (2024 is a leap year): £441/366 = £1.204918

To finish, we now just multiply the daily accrual by the number of days in the relevant month, for August that is 31 days: £1.204918*31 = £37.352459

This means the amount of interest earned in an average month (31 days) for this example would be £37.35

If you believe your interest is incorrect

If you believe the interest you've earned is incorrect, it's worth bearing in mind the following:

  • Interest accrues daily and is paid monthly on the fourth working day of the month

  • Before the fourth working day of the month, the 'Pending' interest figure will show both this month's interest accrual and last month's accrual. However, when it's paid, only last month's interest will be paid. Anything accrued before the fourth working day of this month will be paid on the fourth working day of next month

  • Interest accrues on cleared deposits only and card deposits (this includes autosaves and recurring saves) can take up to three working days to clear

  • Interest starts to accrue from 12 am the following day after a deposit has cleared

  • The interest rate may have changed part-way through the month so you were receiving a different rate for some of the days

  • Interest is calculated on the gross rate, not the AER

If you have any confusion about your interest, please check the summary for more information on each savings account. This can be found in the Settings section on each account in the Savings tab or on our Policies and Important Documents page.

Please reach out to us via email at hello@getchip.uk or via the in-app chat if you have any further questions and we'll be happy to help.

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