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How is interest calculated?
How is interest calculated?
Yoan Jedrowiak avatar
Written by Yoan Jedrowiak
Updated over a week ago

Plum calculates interest daily but is applied to your account monthly.

The reason for doing this, is because most users will begin with small balances and their daily interest accrual will be less than 1p.

The formula is

Balance * Interest Rate % / 365


If you have an Easy Access account with 0.40% interest and your pocket balance is fixed at £10,000, then after a year, you will have £10,040.08.

👉 The interest on the accounts is accrued daily and applied daily, therefore it is compounding.

Please note that this example assumes no withdrawals, additional deposits or changes to the variable interest rate in this period.

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