Interest payable on ISA

[k_bear]

3 questions about an ISA that I hold as I am a bit confused over the rules. The balance currently stands at �6000 (�3k invested last tax year, �3k for current tax year).

1) Is interest accrued on what I pay in for THIS tax year only or is it accrued on the full amount invested?
2) As I have reached the limited for this tax year, will the interest have to be paid into an alternative account or can it be paid into the ISA?
3) Finally, do I accrue interest only on the amount invested, or if interest is paid in monthly, will I accrue interest on the investment + interest i.e. will the interest be the same each month or will be increase incremently?

[CheekyChops]

1) Interest will be paid on the whole amount, not just what you have invested this tax year.

2) The interest can be paid into the ISA - the limit of �3K per year does not include interest.

3) You will earn interest on the interest as well as on the capital.

[k_bear]

Brilliant - thanks for your speedy and helpful reply!

[bricro1]

A note of caution. Some ISA providers tempt you in by offering what seems to be a good rate of interest and then fail to increase it when Base Rate moves up. They increase mortgage repayments speedily!!