Bank Account savings for max interest

talexuser · 15 May 2015 at 6:39PM

Story here
http://www.telegraph.co.uk/finance/personalfinance/bank-accounts/11577641/My-scheme-to-earn-extra-interest-on-current-accounts-failed-heres-why.html

This lady failed her standing order because of weekends and thus incurred a penalty. The Tesco was empty when it should have had a transfer to pass on to another account.

What I cannot understand is why you should have only the money in the account which is being churned for transfers - churning 1K or 1.5K around accounts will not get you extra interest since you only get interest on the days the money is actually in the account?

Or perhaps the savings in each account are less than the churning requirements, so the churning amount is critical? Why then have 5 accounts with not enough money in 4 of them to satisfy your standing orders? Just have 2 or 3 to get max interest on the total where your float is enough to guarantee the standing orders?

Is this another non-story or am I missing something?

masonic · 15 May 2015 at 6:47PM

I suppose it is not uncommon to have a few maxed out accounts and a new one that is just starting to be filled, in which case it is necessary to be very careful with standing orders as there is not enough money in all of the accounts to cover the amount being transferred.

Similarly if you have Halifax Reward accounts or others in which it makes no sense to maintain a large credit balance.

I've always done all of mine manually. It gives me opportunity to log in and check everything is in order once a month, cream off the interest and download statements. I wouldn't want to leave a current account with a large sum of money in without checking on it once in a while.

colsten · 15 May 2015 at 7:17PM

http://forums.moneysavingexpert.com/showthread.php?t=5241449

talexuser · 15 May 2015 at 8:25PM

Thanks, did not see it on the other forum. Confirms my thoughts that she had too many accounts with not enough in them to cover the required transfers adequately.

jimjames · 16 May 2015 at 10:18AM

I could understand if it was the Halifax account that had failed but why have an account paying a decent rate with no money in it?

Zanderman · 16 May 2015 at 10:26AM

jimjames wrote: »

I could understand if it was the Halifax account that had failed but why have an account paying a decent rate with no money in it?

This has all been discussed on the other thread posted above.

Re why not enough money, there's no suggestion (afaik) that she had no money in the Tesco account, just not enough to cover an outgoing £1500 SO.

Whilst it might seem common-sense to have the max £3000 in a Tesco account she may not have had a spare £3000, and so may have only been using that account for, say, £1200.

There's a lot of speculation on these threads about this - but we don't, if I'm reading the story correctly, know enough to suggest she wasn't using the Tesco account well. The only problem we know she had was relying on SOs that were unfortunately timed.

bowlhead99 · 16 May 2015 at 11:03AM

My favourite comment thread on the Telegraph page:

Someone tries to game the system. Gaming strategy falls over because it has been inadequately researched and doesn't have enough slack in case something doesn't go to plan so the system bites her back. Person complains system doesn't offer all the features she requires to allow her to game the system.

It gave her the opportunity to pose for a grumpy face photo that would be worthy of the DM.

Speaking as someone who hasn't been bothered to set up a daisychain of accounts with a large number of banks to extract every possible penny from the terms and conditions on offer, I felt a delicious feeling of schadenfreude in reading the article.

I don't have a complex banking daisy chain with tight timing because I have the luxury of a relatively high income and value my leisure time more than gaining a few extra pounds here and there. I suppose it makes me a bad person for smiling when someone else fails and has to pay a fiver, just like I would smile when someone slips on a banana skin and falls over without actually causing any permanent damage.

Still, she doesn't look like a little old lady being screwed over by a nasty bank. She is retired and presumably the type of person who had adequate time on her hands to actually read up on how to move the money from one place to the next and what the rules were, and monitor the projected balances on her accounts paying attention to effects of bank holidays and weekends, just like she had the time on her hands to pose for a photo with her laptop. And she is the sort of person who incurred a £5 bank fee through her own fault and felt she should tell the newspapers about it.

I hope the article helps some people plan carefully when concocting their wealth-maximisation schemes, but I hope it won't dissuade people from being the type of person who lets us know of their silly mistakes from time to time. It's fun to read them.

KGriff · 16 May 2015 at 12:48PM

I'm not sure the point of Jane Fay's telegraph article is about her losing a fiver, but more about the fact that financial institutions transaction times/days vary quite considerably across the industry.

The 'faster payment scheme' adopted by some institutions (and not all), has also introduced another 'dimension' to these kind of issues.

Jane Fay's mistake was not monitoring her accounts correctly to begin with, to ensure that her standing orders and direct debits were 'perfectly timed' to take into account, the anomaly of the different transaction times/dates. It was Jane's mistake completely and the lesson cost her a mere fiver.

I see the article really as pointing a 'small finger' at the banking industry and trying to hint at the fact, it would help the customer to have a set of standard transaction times/dates nationwide.

The industry however will be reluctant to make any changes, so long as they keep making the odd fiver, from tens of thousands of their 'less well off' customers every weekend.

Sadly the Banks etc. do very little to help regain the public confidence lost during the financial crisis and their motivation will always be to maximise profit for their shareholders at the expense of the ignorant and those who simply don't understand how to maximise their savings or those who can't be bothered or those that cannot afford to live within their means.

You may have noticed in the past two years just how much the institutions have now increased their bank charges. Inflicting more hurt on the poorer in our society.

When I was in my 20’s, I was totally ignorant and didn't bother or care very much about my finances. I had a good secure job and didn't worry. In my early 30’s, like many, I had a mortgage, credit cards, a car (and motorhome) to run and children and occasionally found myself paying the odd bank charge for being over my overdraft limit...

The banks did nothing to help me at all once they had got their teeth into me... Often bank charges were more than any of my missed payments.

A £25 charge for being £3 overdrawn for one day, before a regular monthly payday is just madness and that's the type of thing I found I encountered.

In my mid thirties I woke up to finances and began to manage things much better.

I ditched my debt completely by the time I was 40 and since that time, I have done everything I can to take as much money 'back' from the banks etc. by chasing their highest interest rates etc.

It feels, in some way, like revenge on the banks for the time when they didn't bother to help me. I wish I had learned my lesson sooner. It should have been something taught to me in school and not a lesson I needed to learn for myself ... The hard way!

When my kids reached working age, I found the banks were doing everything to get them onto the path of debt too... loans, credit cards, store cards. It was like a bombardment of 'shiny' offers and encouragement to spend.

Luckily I was on hand to help, but as sensible as they are, my kids could easily have been sucked in by all the offers and advertising.

Like me today, they now chase 'best rates' and review their spending and savings on a frequent basis to maximise their own benefits. They now have their own secure jobs and 'affordable' homes and cars etc.

A lesson learned young. Like I say, such advice should be made available to all during the education years.

So if you think Jane Fay's article in the Telegraph was simply just about losing a fiver, I think you should read it again.

I think it has a wider message to offer.

Jane Fay is young-ish compared to me, these days, but I reckon her 'bitterness' about that mere fiver will encourage her (and her family) to seek the highest rates possible and she too will want her 'revenge'... I think she hopes to encourage others to heed her underlying message.

talexuser · 17 May 2015 at 12:00PM

Just can't understand the reasoning for 5 accounts without the float in each to guarantee standing orders go through fine. If some of the accounts have less money in them than the transfer requirements (leading to the occasional glitch unless you constantly monitor progress), you are not getting interest on a large amount anyway. Just have 2 or 3 accounts maxed out for interest and safely covered for the monthly churn of transfer money. If the total amount is that low, a couple of penalties could reduce your net interest to the point the whole thing was pointless and you may as well have left it in a 1.4% building soc and not spent your time checking balances on the net several days every month.

There must be plenty of stories warning of unregulated investments and scams that would be useful to bring to peoples attention but that might require actual investigative journalism. Some one calls up moaning about their £5 fee (incurred through their own oversight) to get it refunded by a bit of publicity just seems so lazy...

masonic · 17 May 2015 at 12:49PM

talexuser wrote: »

Just can't understand the reasoning for 5 accounts without the float in each to guarantee standing orders go through fine.

If you had, say, a TSB plus account, a Nationwide account, a Tesco current account and £5000, wouldn't you distribute the money so that the higher rate accounts were filled and the Tesco account contained only the remainder of the funds? I don't think the situation is that uncommon.

talexuser · 18 May 2015 at 11:32AM

masonic wrote: »

If you had, say, a TSB plus account, a Nationwide account, a Tesco current account and £5000, wouldn't you distribute the money so that the higher rate accounts were filled and the Tesco account contained only the remainder of the funds? I don't think the situation is that uncommon.

2500 in the Nationwide at 5% which needs £500 a month swap (external funding) and 1750 in TSB at 4.89% (does not even require external funding) for £500 a month swap back. Tesco put eg £751 for the swap. Dates all a week apart, no chance of a penalty, and the difference in interest in the 2.96 tesco extra £250 versus the 4.89 tsb is less than one £5 penalty for the whole year, with no hassle of having to check up all the time.

Bank Account savings for max interest

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