Savings interest rate thread

[rossub]

Yes, I have an accountancy qualification

[spikyone]

Somebody said:

rossub said:

Certainly worth looking into for the £300 pm at 7%

[B]Stating the obvious, but you do realise that you'll only get the full 7%p.a. on the initial £300?[b] The next £300 earns 11 month's interest; the final £300 earns 1 month's interest etc. £136.50 gross interest after 1 year.

Your post makes it sound as though a regular saver is a worse place for your money than an easy access account paying a lower rate, which is a common misconception that was debunked a couple of pages back. This shouldn't need restating because it's very simple.

He'll get 7%pa on every single penny that's in the account, no matter when it goes in. Only getting it for 11 months doesn't mean that you're getting a lower rate. Not getting 7% is not the same as not getting 7%pa, and to say he won't get 7%pa is categorically wrong.

Anything that's in a regular saver account at 7% is earning more than the same money put into a 5% normal easy access account (or even a hypothetical 6.99% easy access) on the same date - if you pay in £300 a month to a 5%pa easy access account, you won't get 5% on amounts that you pay in at any time after the initial deposit.

Besides which, if you have more than the monthly limit for the regular saver, you can hold it in the easy access account in the meantime, so you can't possibly lose.

[Zoon]

spikyone said:

Somebody said:

rossub said:

Certainly worth looking into for the £300 pm at 7%

[B]Stating the obvious, but you do realise that you'll only get the full 7%p.a. on the initial £300?[b] The next £300 earns 11 month's interest; the final £300 earns 1 month's interest etc. £136.50 gross interest after 1 year.

Your post makes it sound as though a regular saver is a worse place for your money than an easy access account paying a lower rate, which is a common misconception that was debunked a couple of pages back. This shouldn't need restating because it's very simple.

He'll get 7%pa on every single penny that's in the account, no matter when it goes in. Only getting it for 11 months doesn't mean that you're getting a lower rate. Not getting 7% is not the same as not getting 7%pa, and to say he won't get 7%pa is categorically wrong.

Anything that's in a regular saver account at 7% is earning more than the same money put into a 5% normal easy access account (or even a hypothetical 6.99% easy access) on the same date - if you pay in £300 a month to a 5%pa easy access account, you won't get 5% on amounts that you pay in at any time after the initial deposit.

Besides which, if you have more than the monthly limit for the regular saver, you can hold it in the easy access account in the meantime, so you can't possibly lose.

The easy way to look at it is you'll get half the headline rate on the full balance at the end of 12 months. In this case 3.5%, so rubbish really

[OldSkoolRS]

spikyone said:

Your post makes it sound as though a regular saver is a worse place for your money than an easy access account paying a lower rate, which is a common misconception that was debunked a couple of pages back. This shouldn't need restating because it's very simple.

He'll get 7%pa on every single penny that's in the account, no matter when it goes in. Only getting it for 11 months doesn't mean that you're getting a lower rate. Not getting 7% is not the same as not getting 7%pa, and to say he won't get 7%pa is categorically wrong.

Anything that's in a regular saver account at 7% is earning more than the same money put into a 5% normal easy access account (or even a hypothetical 6.99% easy access) on the same date - if you pay in £300 a month to a 5%pa easy access account, you won't get 5% on amounts that you pay in at any time after the initial deposit.

Besides which, if you have more than the monthly limit for the regular saver, you can hold it in the easy access account in the meantime, so you can't possibly lose.

However £136 interest over a year vs some slightly smaller amount just in a standard easy access savings rate is hardly going to be life changing, so you also have to question if it's worth the time and hassle running multiple accounts? Not trying to be a big CEO type, but £136 in total over a year isn't going to make much difference (a opposed to the built up capital) let alone the £20-30 difference we're arguing about surely?

[Shnozz]

OldSkoolRS said:

However £136 interest over a year vs some slightly smaller amount just in a standard easy access savings rate is hardly going to be life changing, so you also have to question if it's worth the time and hassle running multiple accounts? Not trying to be a big CEO type, but £136 in total over a year isn't going to make much difference (a opposed to the built up capital) let alone the £20-30 difference we're arguing about surely?

Indeed. I think these 7% headlines are good marketing and very much a headline. When you do the sums £136 isn’t much benefit but many won’t do the calculations but see only 7%. I would imagine drip feeding a global tracker would yield better financial outcomes albeit appreciate it carries a risk that a savings account doesn’t so is a different product line really. As regular savings accounts goes, 7% is 7%, but the financial return is a meal out once a year in reality.

[AdamV12V]

Those accounts which pay great rates but are limited to pitiful amounts such as £300 a month really arnt worth bothering with, UNLESS you don't have any current savings to invest and can only afford the £300 p/m.

On £300 p/m at 7% that's £3600 per year max you can invest, or £1800 balance on average over the whole year.

You could fairly readily get 5% elsewhere so we are talking about a 2% upside on the £1800 annual investment, which is a whopping £36 a year over just plonking a chunk of cash into a 5% account today and forgetting about it.

£36 wouldn't even buys you a brunch for 2 people these days, so IMHO you're far better off just looking at an account which doesn't limit the investment to tiny monthly payments - unless, as I said at the beginning of the post, you simply don't have any savings and are only able to save the amt matching the account terms, in which case I guess a brunch out for two is probably a big annual extravagance.

EDIT - apologies, since i started writing this and finally posted it, a few others above have said largely the same thing...

[spikyone]

Zoon said:

spikyone said:

Somebody said:

rossub said:

Certainly worth looking into for the £300 pm at 7%

[B]Stating the obvious, but you do realise that you'll only get the full 7%p.a. on the initial £300?[b] The next £300 earns 11 month's interest; the final £300 earns 1 month's interest etc. £136.50 gross interest after 1 year.

Your post makes it sound as though a regular saver is a worse place for your money than an easy access account paying a lower rate, which is a common misconception that was debunked a couple of pages back. This shouldn't need restating because it's very simple.

He'll get 7%pa on every single penny that's in the account, no matter when it goes in. Only getting it for 11 months doesn't mean that you're getting a lower rate. Not getting 7% is not the same as not getting 7%pa, and to say he won't get 7%pa is categorically wrong.

Anything that's in a regular saver account at 7% is earning more than the same money put into a 5% normal easy access account (or even a hypothetical 6.99% easy access) on the same date - if you pay in £300 a month to a 5%pa easy access account, you won't get 5% on amounts that you pay in at any time after the initial deposit.

Besides which, if you have more than the monthly limit for the regular saver, you can hold it in the easy access account in the meantime, so you can't possibly lose.

The easy way to look at it is you'll get half the headline rate on the full balance at the end of 12 months. In this case 3.5%, so rubbish really

I understand how they work. If you put money into a 5%pa easy access account at the same rate you'd only get 2.5%, which is even more rubbish.


---

Shnozz said:

Indeed. I think these 7% headlines are good marketing and very much a headline. When you do the sums £136 isn’t much benefit but many won’t do the calculations but see only 7%. I would imagine drip feeding a global tracker would yield better financial outcomes albeit appreciate it carries a risk that a savings account doesn’t so is a different product line really. As regular savings accounts goes, 7% is 7%, but the financial return is a meal out once a year in reality.

Not just aimed at you, but this thread is about savings accounts and the best rates for those. 7% for a savings account is a market-leading rate, which is why it's being discussed.
It might not be a huge amount to a powerfully built director type but that's sort of beside the point. All of us hold money in cash, if you don't want to maximise what you're getting from that cash then fair enough, but I don't understand why you and others would post here simply to poo-poo it?

[rossub]

AdamV12V said:

Those accounts which pay great rates but are limited to pitiful amounts such as £300 a month

That makes you sound like a bit of an arse really. I know you didn't mean it to, but saving £300 a month on top of all the rest of life's costs is a pipe dream to a very large chunk of the population.

[rossub]

It's also £36k over a 10 year period.

[rossub]

spikyone said:

It might not be a huge amount to a powerfully built director type but that's sort of beside the point. All of us hold money in cash, if you don't want to maximise what you're getting from that cash then fair enough, but I don't understand why you and others would post here simply to poo-poo it?

Exactly.

The regular saver accounts are what they say on the tin - they're best suited for future savings that you don't have yet!

Like I said way back, I'm a regular saver out of salary and looking to have enough savings within 2 years to cover the Mortgage balance (rate of 1.23% until Feb '27, so no point overpaying)

I have £25k saved up so far in a fixed rate ISA at 5.66% and am adding to that amount monthly via the best interest rate accounts I can find. All while not tipping over the £500 tax threshold on the bits that are taxable.

[GT4P]

So let’s say you have income coming each month of £500 to add to a savings pot, yes you might have say the Santander at 5.2% but your better off putting in to say the YBS at 7% first? Well that’s what we do! Why would you put it in the lower account first?

[J210]

I'm sadly set to inherit a small amount of money.

I have some savings in instant access savings accounts. As the small inheritance will likely send me over the tax threshold at some point in the year. Should I just plonk it in an instant access ISA until I need it. (as I do have plans for it, but could take months/years)

[bmwmike]

GT4P said:

So let’s say you have income coming each month of £500 to add to a savings pot, yes you might have say the Santander at 5.2% but your better off putting in to say the YBS at 7% first? Well that’s what we do! Why would you put it in the lower account first?

By the time you take a month interest off, as you withdraw/move it from the YBS to santander, there won't be much difference. Also can you put the 500 straight into the YBS each month and get the 7%/12 rate? If so great, but if you could only put, say, £250 in, you need to wait another month of the £250 remainder earning no interest, or what do you do with it?

In short you may as well wack the full amount £500 into Santander and be done with it IMO.

That said, the santander rate is dropping to 4% soon isn't it.

[GT4P]

Yes the account is 7% for 12 months and deposits of £500 a month. Once it’s finished circa September/October will draw out the £6k plus interest and put in what ever account is paying the best interest.l

[rossub]

J210 said:

I'm sadly set to inherit a small amount of money.

I have some savings in instant access savings accounts. As the small inheritance will likely send me over the tax threshold at some point in the year. Should I just plonk it in an instant access ISA until I need it. (as I do have plans for it, but could take months/years)

Sounds like the best option.

Even the best 1 year fixes are sub 4.7%, so you're not likely to lose out that much later in the year by going easy access at 5% +

[Ken Figenus]

J210 said:

I'm sadly set to inherit a small amount of money.

I have some savings in instant access savings accounts. As the small inheritance will likely send me over the tax threshold at some point in the year. Should I just plonk it in an instant access ISA until I need it. (as I do have plans for it, but could take months/years)

Cant see why not - you can easily get 5% on 20k tax free ISA and also one for your partner too. And then same again the following year.

[981Boxess]

rossub said:

Even the best 1 year fixes are sub 4.7%, so you're not likely to lose out that much later in the year by going easy access at 5% +

Virgin Money 1 Year Fixed Rate Cash ISA Exclusive Issue 12 - 5.05%

[rossub]

981Boxess said:

rossub said:

Even the best 1 year fixes are sub 4.7%, so you're not likely to lose out that much later in the year by going easy access at 5% +

Virgin Money 1 Year Fixed Rate Cash ISA Exclusive Issue 12 - 5.05%

If you're a customer of Virgin...

[981Boxess]

rossub said:

981Boxess said:

rossub said:

Even the best 1 year fixes are sub 4.7%, so you're not likely to lose out that much later in the year by going easy access at 5% +

Virgin Money 1 Year Fixed Rate Cash ISA Exclusive Issue 12 - 5.05%

If you're a customer of Virgin...

"This account is only available for existing or new Virgin Money current account holders - non-customers may feel it is worth opening one to secure this rate"

[rossub]

I dunno. Opening bank accounts left, right & centre to get slightly better rates doesn't sit that well with me.

As someone pointed out, it's a hard search on your credit file each time. Though I suppose 1 extra current account wouldn't be that bad.