In this paper, we study the dynamics of a trapped atom interferometer with internal state labeling in the presence of interactions. We consider two situations: an atomic clock in which the internal states remain superposed, and an inertial sensor configuration in which they are separated. From the average spin evolution, we deduce the fringe contrast and the phase shift. In the clock configuration, we recover the well-known identical spin rotation effect (ISRE) which can significantly increase the spin coherence time. We also find that the magnitude of the effect depends on the trap geometry in a way that is consistent with our recent experimental results in a clock configuration [M. Dupont-Nivet, R. Demur, C. I. Westbrook, and S. Schwartz, New J. Phys. 20, 043051 (2018)], where ISRE was not observed. In the case of an inertial sensor, we show that despite the spatial separation it is still possible to increase the coherence time by using mean field interactions to counteract asymmetries of the trapping potential.