Isa Interest

[dosset]

how is isa interest calculated?is it compounded and added on daily or added on annually?

[kjn2]

interest is due on the amount of money in the account each day. However it depends on the individual ISA as each company sets whether interest is worked out daily, monthly or annually. This makes a difference as if interest is calculated daily, the balance of your account is increasing on a daily basis (albeit it may only by a tiny amount) and tomorrow you be earning interest on the amount in your account plus the interest added today. Therefore the best calculation is a daily basis

[factor-fiction]

Hi-both your options are probably correct - it is normally compounded daily and then added to your account periodically- usually annually- with the daily compounded rate adding up to the promised annual rate. It may differ though for a fixed term contract or other contract where penalties apply for early closure/withdrawal.
Can I ask why you are asking as it may affect the answer you need.
Thanks