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.
How is interest calculated?
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.
Why doesn't the interest in my account match my own calculations?
If the interest you're seeing in your account looks a little different from what you've calculated, don't worry! There are a few common reasons why this might be the case:
Interest payment timing. Interest is calculated daily but paid monthly on the fourth working day of the month. Before the fourth working day of the month, the Pending interest figure in your account will show your total accrued interest for the current month and previous month, but we'll only pay out the previous month's interest.
Pending deposits. Interest is only calculated on deposits that have fully cleared. If you've made a card deposit (including autosaves and some recurring deposits), it can take up to three working days to clear before it starts earning interest.
Variable rate changes. The interest rate may have changed partway through the month, so you would have earned a different rate on some days.
AER vs. gross rate. We calculate your interest based on the gross rate, which is a slightly different number from the AER.
If you're still confused about your interest, you can check the summary for your savings account in the Savings tab.
When does interest start to accrue?
Interest on your funds starts to accrue as soon as your deposit has been processed into your account.
Your interest is calculated daily at midnight and will be paid monthly on the fourth working day of the month for the interest earned in the previous month.
When is interest paid?
Interest is paid on the fourth working day of each month.
What does 'Pending interest’ mean?
Pending interest is the total amount of interest you've earned to date that hasn't yet been paid into your account.
Up until the fourth working day of the month (when interest is paid), this figure will include both the interest earned in the previous month and any interest you've accrued in the current month.
What happens to my accrued interest if I close my account?
If you close your account, any interest you've accrued will be paid immediately upon closure.
Why is the gross rate lower than the AER
The Gross Interest Rate is the rate before tax and does not include the effect of compounding. It simply shows the basic rate applied to your savings.#
Since your account compounds interest daily and pays it monthly, the AER will be higher than the gross rate, because it includes the effect of earning interest on interest. If your funds stay in the account for the full year at the same interest rate, the AER represents the actual return you'd receive.
Can you pay my interest to my linked bank account?
Unfortunately, we're unable to pay interest automatically to your linked bank account.
Interest is paid into the account where you hold your funds, such as the Chip Cash ISA, Chip Easy Access Account or Chip Instant Access Account.
If you would like the accrued interest to be moved to your linked bank account, you'll need to manually withdraw it.
Does interest count toward my annual ISA allowance in the Chip Cash ISA?
The interest you earn on your funds in the Chip Cash ISA doesn't count towards your annual £20,000 ISA allowance.
Is my interest rate fixed?
No, the interest rates on our savings accounts aren't fixed. They are variable, which means they can change.
The Chip Cash ISA, Chip Easy Access Account, and Chip Instant Access Account all have a tracker rate. This means your savings rate will automatically change on the same day that the Bank of England's base rate moves up or down.
A tracker rate change is automatic and tied to the Bank of England's rate, so we don't send a separate notification. However, if we decide to change your rate, we'll always let you know ahead of time.