Instant Access Savings Accounts Article Discussion Area

The Coventry Building Society's headline rate of 5.25% gross looks great, BUT you can only deposit up to a maximum £2,000 per month. This means that only the first monthly deposit gets a year's interest etc. If you deposited £2,000 per month for a year, you would have a sum of at the end of the year (assuming basic rate tax) of £24,455.61.

But how does this compare to leaving £24,000 on deposit elsewhere?

To accumulate £24,455.61 over a year, you would only need to obtain an, after basic rate tax, interest rate of 1.9%!

The same argument applies to all the other monthly deposit schemes offereing a high headline interest rate... If something looks to good to be true, it probably is!

I thought I would add the numbers as I see them:
To get max interest.
To start you would put £2000 in the Coventry Regular saver at 5.2% interest (=4.16% after tax) and £22000 in the coventry current account at 5.1% interest(4.08% after tax).
On the first of each month you would move £2000 to the regular saver and 1000 to another account you hold.
On the second of each month you would move the £1000 back to the coventry current account (this to ensure the coventry account has a £1000 turnover required to maintain a 5.1% interest rate).
At the end of the year (dont forget interest is added daily) you would have £24536.86 in the regular saver and £446.18 interest left in your current account. I allowed 3 days loss of interest on the moving £1000
That's £983.04 interest in total.
However if you just put your money in the coventry current (5.1%) account and poped £1000 in and out (maybe use it to pay off your credit card in full each month?) you would still get £976.46 interest. So the regular saver is only giving you £6.58 a year interest.
Am I right?
I'm always looking for the best so if you can beat the £983.04 be sure to let us know.

I have paid my £1 and opened a savings account with ICICI. THey have sent me a web form with all my current bank details on and have asked me to set up a direct debit to pay in. Why do I need a DD? I transfer money regularly without the need for a DD. Does this mean I am expected to save a regular amount each month on a DD? If so, I do not want to do this as my income varies and I may wish to save different amounts at odd times. Until I kow the answers to these questions i am not going to set it up any further. Help please.

square-eyes wrote:

I tried once before to open a new savings account with the Bank of Ireland. Unfortunatly their anti money laundering requirements are so onerous (like sending your passport) that I thougt the extra costs of setting up the account safetly (registered mail etc) would offset any extra interest gained.

I think the Bank of Ireland is a good bank and the identity and address requirements seem to be the same with most banks/Bldg Socs these days. I never send my passport to these people as they do accept many other types of proof of identity. Never had a problem with any of them.

Jake'sGran wrote:

I do like the way ING pay interest monthly as you then receive interest on interest at the end of the year.

This is just the way the numbers are presented. All instant access accounts including ING pay interest on interest every day (called compound interest) and you can get it any time you like. To get the best returns go for the best AER every time. (Provided there are no other particular conditions you don't like). Ing are at 4.5% AER Look at Martins article to see who is currently paying the best. (It's not ING).
I tend to get on my hobby-horse about this because I believe that if I can persuade more people to move their money to the best payer then that will increase the competitiveness within the industry.