Cash ISA - Interest Calculation
Updated over a week ago

Calculation Amount

The interest for your Cash ISA is calculated on a daily basis in the background, based on the money you have at the end of each day. However, the interest amount is credited to your Cash ISA once a month, specifically on the first business day of each month.

This monthly addition occurs because, in most cases, the daily amounts are too small to be individually added to your pocket. This is the formula we use every day in our system to calculate the interest for Cash ISA in Plum:

Example: Consider a Cash ISA account with a 0.40% interest rate and an initial balance of £10,000. After a year, the balance would be £10,040.08 assuming that no withdrawals, additional deposits, or changes to the variable interest rate have happened during this period.

Calculation Period

You might observe variations in the monthly interest amount, where one month appears higher, and the next month lower, despite no changes or withdrawals from your side.

This occurrence is attributed to the crediting of interest in distinct periods:

  • The first day of the calculation period is the first day after the last interest credit in your Cash ISA.

  • The last day of the calculation period is the actual day of the interest credit in your Cash ISA.

Example: Suppose the first business day falls on the 3rd day of a month. These initial 3 days contribute to the current period, resulting in a higher amount due to the inclusion of more days. Subsequently, the next calculation period will encompass fewer days (as 3 were already credited in the previous period), potentially leading to a slightly smaller amount.

Please note that if you withdraw your money before the interest is credited to your account, the interest will be lost. We recommend making withdrawals only after the interest rate has been credited to your Cash ISA.

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