Currently, the Chip Instant Access Account and the Chip Cash ISA offer returns in the form of interest. In this article, we take a look at how interest is calculated on both of these accounts.
Chip Instant Access Account
The Chip Instant Access Account offers 4.84% AER (Variable). So for example, let's say that you have held a balance of £10,000 throughout the month of August where the rate has been set at 4.84% AER (variable) (4.74% Gross) for the whole month.
First, we would need to calculate the interest earned annually: (£10,000/100)*4.74 = £474
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): £474/366 = £1.2950819672
To finish, we now just multiply the daily accrual by the number of days in the relevant month, for August that is 31 days: £1.2950819672*31 = £40.1475
This means the amount of interest earned in August for this example would be £40.15.
Please note that if you have the boosted rate, the calculation will be different. For example, if you held £20,000 in August, the calculation would be £20,000*(4.90 / 100 / 366 = £1.33879781 (daily). This would mean the amount earned in August would be £41.50.
Chip Cash ISA
The Cash ISA offers 5.10% AER (Variable). So for example, let's say that you have held a balance of £10,000 throughout the month of August where the rate has been set at 5.10% AER (variable) (4.99% Gross) for the whole month.
First, we would need to calculate the interest earned annually: (£10,000/100)*4.99 = £499
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): £499/366 = £1.3633879781
To finish, we now just multiply the daily accrual by the number of days in the relevant month, for August that is 31 days: £1.3633879781*31 = £42.26
This means the amount of interest earned in August for this example would be £42.26.
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 increased 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.