How is interest calculated on my Smart Saver and why does it sometimes not add up?

Updated 1 month ago

We calculate interest payments to 8 decimal places, which allows for a greater level of accuracy and fairness. But, when reporting interest payments to you, we can only display whole pence, which go to a maximum of two decimal places.

That means £1.38675628 of interest earned will show in your account as £1.38

Over time, this can lead to small differences between the interest payments applied to your account and your total savings balance. This is due to ‘micro-pennies’ – all those numbers after the second decimal place – adding up to more than one penny.

We know this is a bit confusing, so here’s an example to clear things up:

  1. A savings account has a total balance of £100.00.
  2. In the first month, the account receives an interest payment of £0.16832555, bringing the total balance to £100.16832555. To report whole pence, the interest earned is displayed as £0.16, and the new total balance is displayed as £100.16.
  3. Next month, the account receives an interest payment of £0.16316989, bringing the total balance to £100.33149543. The interest earned for that month is displayed as £0.16, but the new total balance is displayed as £100.33.

So, although the interest amount displayed was £0.16 each month, the total balance displayed is £100.33. That extra £0.01 is a result of the micro pennies adding up month-on-month.

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