Regular Saver Interest

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  • AndyT678
    AndyT678 Posts: 757
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    phillw wrote: »
    It's not that they expect to get interest on money they haven't deposited, they just want to know how much money they'll get back if they deposit the money.

    And how exactly would you calculate that for an account where the deposit amounts can be varied from month to month and made on different days each month and maybe even withdrawn and replaced within a month?
  • mollycat
    mollycat Posts: 1,475
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    phillw wrote: »
    It has been done to death, by people arguing about two different things. So there will never be consensus. People want to know what value they'll get back if they save a certain total amount of money spread over 12 payments, knowing the aer doesn't help them.

    The answer is slightly more than half of the interest rate, but if you have the money sitting elsewhere then it can be earning interest elsewhere too.



    It's not that they expect to get interest on money they haven't deposited, they just want to know how much money they'll get back if they deposit the money. Repeating that it's 4% doesn't help them. They may not have asked the exactly correct question, but being pedantic isn't very nice.

    But it is 4%. No pedantry involved.
  • Eco_Miser
    Eco_Miser Posts: 4,708
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    phillw wrote: »
    People want to know what value they'll get back if they save a certain total amount of money spread over 12 payments, knowing the aer doesn't help them.
    But it does:
    Interest = 6½ * monthly deposit * aer
    give or take a few pence because the months are not of equal length, and deposits may not be on the same day each month.
    Eco Miser
    Saving money for well over half a century
  • badger09
    badger09 Posts: 11,128
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    @ silolz0rz

    You are not allowed to tout for referrals. Please stop.
  • EachPenny
    EachPenny Posts: 12,239
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    badger09 wrote: »
    Indeed. But apparently some people still expect banks to pay them interest on money they haven't yet deposited

    Some people are quite happy for banks to pay them interest on money they don't actually have ;)
    eskbanker wrote: »
    Yes, always useful when institutions provide such projections (are they now obliged to perhaps?)...

    Apologies if that was a rhetorical question, but for anyone interested in the topic and looking for some light bedtime reading BCOBS 2.2A.1R sets out the requirement to have a summary box and what it needs to contain. https://www.handbook.fca.org.uk/handbook/BCOBS/2/2A.html

    BCOBS 2 Annex1 provides the detail https://www.handbook.fca.org.uk/handbook/BCOBS/2/Annex1.html

    Item 3 of Annex1 states:
    One or more projections of the future balance of the savings account, which provide a representative illustration of the cash returns that the account will generate

    Item 4 is also well worth reading, especially the first point...
    "In the future, everyone will be rich for 15 minutes"
  • GazHol
    GazHol Posts: 69
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    The actual interest paid is dependent on how long each £1 has been in the RS earning interest. To maximise the RS interest total, you would open your RS on the last day of the shortest month, then pay each monthly SO on the 1st of each of the remaining months. Your initial payment gets 365 days interest, the 2nd gets 364 days etc.

    For accounts with daily interest, the 29th Feb last year meant that yearly interest was slightly higher then will be the case for the next three years.

    Note that the total amount of interest you cam earn across all accounts may be higher if you open the RS on the day of issue, and not all RS have the account month aligned with a calendar month.
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