Halifax Childs Regular Saver, Not Impressed

MarcusB · 3 November 2006 at 4:46PM

Now I may be thick when it comes to these things, but when i see something that tells me 10% gross AER if I save regularly for a year, I'd expect that, not under 5%.

I guess my expectations were wrong, I set up 2 of these one each for my Kids, and put approx £25 in each a month. the accounts came to term this month, just had the statements and instead of the healthy £27 interest I expected, (10% on £270) they got £13 and then they were taxed, even tho we submitted the exemption forms.

Halifax say its correct as they calculate the interest daily, and not at term as I understood it.

Is there anything better out there?

thumshie · 3 November 2006 at 5:04PM

Unfortuantly I don't know of a saving scheme that pays at term. Otherwise I'd invest £1 to open it, then the day before the anniversary pay in £10k tranfered from my icesave

As for saving schemes for kids, the Halifax is one of the better ones if you don't have a lump sum. If however you do, you can get as good a return via Halifax save4it or Yorkshires one day account.

To quote Martin http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1089574348,16470,

There’s one account that spanks the bottom of all the others, Halifax’s Children’s Regular Saver account, which pays a whopping 10%.

obviously a combination can be used if you have the time/energy where by the lump sum is invested say into the save4it and then fed per month into the regular saver- upto £100pm i beleive.

I'd complain about the tax.

grumbler · 3 November 2006 at 5:13PM

MarcusB wrote:

...Halifax say its correct as they calculate the interest daily, and not at term as I understood it.

This is common misunderstanding:

Sadly Regular Saver accounts have often received negative publicity due to a flawed understanding of them, with comments like:

“Invest £3,000 for a year in a standard 5% savings account and you get £150 interest before tax, yet £3000 in a Regular Saver at 7% only earns you around £110 interest, so these accounts are poor.”

This is silly logic, as in practice you’re drip feeding the £250/month in, so the rest of your money is in another account (hopefully) earning high interest, while it waits to be fed in. Thus to compare fairly, add all the interest together. Do that and you’ll find you’re earning much more.

Martin, Regular Saver article

ReportInvestor · 3 November 2006 at 6:43PM

Your expectations are entirely unreasonable.

This was a fantastic, unbeatable, one off account. Well done Halifax :j.

If you're not impressed by this, God help you with the rest of the banks & building societies :rolleyes:.

What are you getting on the rest of your money, after tax? 3/4%?

And what are your kids getting? 5% if they're lucky.

And you're actually complaining about 10% :eek: GROSS WITH NO RISK TO YOUR CAPITAL?

Get real, please.

Cypher · 3 November 2006 at 7:19PM

I opened one each for my children and paid in £10 per month for a year. They each recieved £6.43 interest

6.43/120 = 5.36% which is actually a bit more than I was expecting.

As I only paid in £10 per month, the average balance of the account was £60 for the year. So I expected to earn about £6 interest.

no complaints from me, other than I wish I could have afforded to save more than £10 a month for them.

Mikeyorks · 3 November 2006 at 8:08PM

MarcusB wrote:

1) ........I guess my expectations were wrong

2) ........then they were taxed, even tho we submitted the exemption forms.

1) ......No , but your arithmetic is. You got 10% on the money in each account each day. The accounts each had an average of £150 in - so 10% gives £15 interest??

2) You don't submit R85s to Halifax. You ring them up / go into the Branch - they will set the accounts up for 'gross' and write to you to that effect.

InMyDreams · 3 November 2006 at 8:15PM

MarcusB wrote:

I set up 2 of these one each for my Kids, and put approx £25 in each a month. the accounts came to term this month, just had the statements and instead of the healthy £27 interest I expected, (10% on £270) they got £13 and then they were taxed, even tho we submitted the exemption forms.

Halifax say its correct as they calculate the interest daily, and not at term as I understood it.

If you understood that the 10% was calculated at term, then why did you put more that the minimum £10/month in into it throughout the year? Why didn't you put the extra money into another interest-earning account first, then transfer your excess savings over in in the last couple of months? I'm afraid I'm with RI on this. I can understand that you feel robbed, as you didn't get what you expected, but please be consoled by the fact that you really did get a very good deal, and you couldn't have done much better.

Re the tax though, I'm sure you can claim this back on a tax return, although I'm not sure how that would work for children as I've only ever done it for myself.

IMD.

grumbler · 3 November 2006 at 8:35PM

InMyDreams wrote:

...Re the tax though, I'm sure you can claim this back on a tax return, although I'm not sure how that would work for children as I've only ever done it for myself...

I think £3.25 doesn't worth a hassle of claiming on a tax return. However, I am sure it is not late yet to ask Halifax to correct the mistake.

MarcusB · 4 November 2006 at 11:53AM

Thanks for the replies chaps, mind you ReportInvestor could have done without your tone, obviously we cant all know what were doing as you obviously do

as it happens all my savings are in tax exempt accounts, or my wifes name as she doesn't pay tax.

Yup my expectations were wrong I know better now, and I can see all your points on the interest at term.

I had submitted the R85's to the branch, & they have corrected it now, but I need to claim the Tax back via the IR, and as grumbler says its not worth it for £3 I'll just pay that in myself to compensate.

Thanks again for all your input

Market_Oracle · 4 November 2006 at 1:07PM

MarcusB wrote:

Now I may be thick when it comes to these things, but when i see something that tells me 10% gross AER if I save regularly for a year, I'd expect that, not under 5%.

I guess my expectations were wrong, I set up 2 of these one each for my Kids, and put approx £25 in each a month. the accounts came to term this month, just had the statements and instead of the healthy £27 interest I expected, (10% on £270) they got £13 and then they were taxed, even tho we submitted the exemption forms.

Halifax say its correct as they calculate the interest daily, and not at term as I understood it.

Is there anything better out there?

Your interest expectations were wrong, a quick way to calc the regular savers expected return is to divide the interest rate by 2. hence you should expect 5% which is what you have got.

Saying that, the halifax account is very badly run by the halifax, looks like its purely a sales gimmick with little support,

VERY BADLY MANAGED AND RUN !

You should do a letter of complaint with regards the R85 tax forms etc.

Market_Oracle · 4 November 2006 at 1:09PM

MarcusB wrote:

I had submitted the R85's to the branch, & they have corrected it now, but I need to claim the Tax back via the IR, and as grumbler says its not worth it for £3 I'll just pay that in myself to compensate.

Thanks again for all your input

If the account matured this financial year, which is highly likely given that its November, then the useless good for nothing branch staff are lieing to.

You need to call the online help line who will fix it for you

The branch said the same BS to me, I told them but its the current tax so you should be able to fix it, but the branch staff are thick, so I spoke to the people online and they fixed it.

Halifax Childs Regular Saver, Not Impressed

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