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Regular saver maths!
Chaddee
Posts: 59 Forumite
Once upon a time I did A level Maths, believe it or not. I am rubbish! My question is if you put £250 per month into HSBC's regular saver at 8% gross, is the interest calculated daily? And if so how do you work out how much interest you'd get at the end of the year? I want to work out whether it is worth paying to have bank account plus in order to get 10% on the regular saver, or whether I'd pay more in fees than I'd make in interest.
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As a rule of thumb you would get half the stated rate, eg 8% would accrue 4% of £3000 for the year, this is of course taxed. The reason it is only half is because you have an increasing balance from £250 to £3000 at the end of the year.
To be more accurate at the end of the year at 8% you would get £3108 before tax at 10% £3141 if the £250 was deposited on the first of the month.
Edit The account is interest daily compounded monthly so 8% = 7.72% gross and 10% =9.57% gross.Change is here to stay0 -
Assuming the account starts with your first payment and you then pay on the same day for the next 11 months then the interest will be close to 6.5/12 x 8% (or whatever) rather than a half ...0
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According to my calculations the scenario suggested would accrue
£104 nett interest for a basic rate tax payer.
£78 nett interest for a higher rate tax payer.
£130 'nett' interest for a non tax payer.Live long and prosper.
China in your hands.0 -
It says here you'd pay £113 in the first year just for the privilege. Compare that to the 2% (gross) differential on an average regular saver balance of £1625 - £32.50 before tax - and I think you'll agree it's plain which regular saver account you should open..worth paying to have bank account plus in order to get 10% on the regular saver [?] or ..pay more in fees than I'd make in interest[?].....under construction.... COVID is a [discontinued] scam0 -
As a rule of thumb you would get half the stated rate, eg 8% would accrue 4% of £3000 for the year, this is of course taxed. The reason it is only half is because you have an increasing balance from £250 to £3000 at the end of the year.
To be more accurate at the end of the year at 8% you would get £3108 before tax at 10% £3141 if the £250 was deposited on the first of the month.
Edit The account is interest daily compounded monthly so 8% = 7.72% gross and 10% =9.57% gross.
I did it like this to get your 3,108 ( 250 X 1.08^0/12 + 250 X 1.08^1/12 + ....etc )
Are regular savers meant to be funded from a say a monthly salary ?
I assume some on here have schemes to move money between accounts from a lump sum so they get the 4% + whatever the monthly reducing balance earns in the original location. Guess it depends on the feeding options.0 -
Thank you all for your help. The bank account plus other added extras still wouldn't make it worth it for me so I think I shall stick to the normal regular saver. And thanks for explaining how the interest works!0
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