Is 5% annual and 4.75% monthly the same?

A

Aloysius

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I opened a Demand Online Account with Northern Rock paying 5%. However it seems that if you have your interest paid monthly the rate is .25% less. Does this work out the same or should I change it to annual interest?
 
It is not the same. Both rates are APRs so the lower one is, well, lower. Opt for the higher annual one unless you really need monthly payment of interest - e.g. to supplement your income from other sources.
 
Sorry I should have been clearer. I am having the interest paid into my current account monthly so won't be getting interest on the interest IYKWIM. In this case is it the same?
 
No. 5% CAR is simply a higher return than 4.75% CAR. The same would apply even if you left the monthly interest on deposit and let it compound.
 
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