Regular Savings Accounts Article Discussion

RG2015 wrote: »

If easy access rates continue to rise though will VM raise their 2.25% rate?

As counterintuitive as it sounds, my first preference would be for them to leave everything exactly as it is

A slightly improved interest rate might come with unwelcome strings.

EachPenny wrote: »

So any regular saver offering 1.5% or above represents a more attractive option (to me) than trying to maintain all the current accounts. My 123 account will also be history by that point of course.

Have you considered the NatWest savings builder? It is much maligned but run correctly can be a worthwhile option.

First, you can deposit £5,000 on day one and earn 1.50% which is very unusual for regular saver. However you need to increase the balance by £100 per month and balances between £5,000 and £10,000 earn only 1.00% although the first £5,000 continues to earn 1.50%.

I deposited £4,000 and earned 1.50% for 10 months starting at £4,000 and ending at £5,000. I then transferred out in month 11 and sacrificed * one month's interest and started again.

Finally the monthly increase is measured on the penultimate working day of the month so this can catch people out. Despite the crazy conditions for me it is good and I like getting some easy money from NatWest.

* Edit: I didn't actually lose one month's interest as my balance earned 1.50% in my 123 account for that month.

RG2015 wrote: »

Have you considered the NatWest savings builder? It is much maligned but run correctly can be a worthwhile option.

Yes, I've had one for about a year now and completely agree, so long as you are willing to understand and comply with the complex T&C's then it has some valuable features.

I adopted a different strategy to you though. For me the priority is to seek to get the money into a higher interest account as quickly as possible, unless there is a clear reason not to. (e.g. interest rates are about to increase)

12 months ago 1.05% was the best access savings rate I was looking at, so I started the Savings Builder with £5k. In month 2 that meant having an additional 'balance growth' £100 only earning 1% (not 1.05%) but it meant having the 'extra' £1000 (compared to your approach) earning 1.5% (rather than 1.05%). The 'gain' of 0.45% on £1000 is obviously much greater than the 'loss' of 0.05% on £100.

Because of the penultimate working day requirement, the first 'growth' £100 didn't need to be paid in until very near the end of month 2, thus gaining two month's interest at 1.5% on that 'extra' £1000 with very little loss on the 'growth' £100.

The same has applied in subsequent months, the 'growth' £100 has always gone in as close as possible to the end of the month. It is possible (I've never got round to checking) that the additional growth deposit required is actually £100 less the interest credited to the account that month.

This month the Savings Builder has become my 'sacrificial lamb' account. So I'm now exploring a different quirk in the T&C's The account has no maximum pay-in and unrestricted FP withdrawals. So when I needed to fund new RS accounts I've taken it from the Savings Builder. Shortly before the end of the month I will 'borrow' enough from my 123 account to restore the Savings Builder to the start of the month balance plus £100 and thus meet the bonus condition to earn the full 1.5% on the various amounts which remained in the account during the month

That 'quirk' means it can be used as an instant access account earning 1.5% on up to £5000, provided you can always 'borrow' enough from other accounts for a few days in order to inflate the balance to the level required to meet the growth bonus condition on the day it has to be met. :cool:

So with hindsight, the optimal way of running the account would be to start with £5000 then add £100 near the end of month two, withdraw £100 at the start of month three. Add £200 near the end of month three, withdraw £200 at the start of month four... and so on. That way you maximise the earnings at 1.5% and minimise the time anything is only earning 1%.

RG2015 wrote: »

I bet you did double maths at A Level!

I might have done But I only enjoyed applied maths for some reason

solartom wrote: »

the only RS that allows £400 pcm is the Club Lloyds Monthly Saver
but you need the Club Lloyds Current Account to get it
other option would be to open 2 RS with different Banks/BS or if you have a virgin branch near you could open one in branch and one online(not using the full allowance)
that would save having to open a new current account

Thanks for your thoughts. The Club Lloyds is not an option for me at the moment, but I could consider 2 RS I suppose. Just didn't really want too many more accounts!