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  • FIRST POST
    moneyandmountains
    Are Regular Savers still worth it?
    • #1
    • 7th Jul 07, 11:32 AM
    Are Regular Savers still worth it? 7th Jul 07 at 11:32 AM
    With the increase in bank base rate, I have been thinking about whether drip feeding regular savings account is still worth it, or whether it is more trouble than it is worth.

    In order to test this, I have done some calculations (please feel free to check the maths).
    These are for 1 year fixed rate regular savers.
    As a reference, I have taken a standard savings account with 6.2% AER.
    Note: I have not combined the standard savings and regular saver rates, as I was only interested in the additional gain.
    I have made the following other assumptions.
    a)£250 regular saver amount (other amounts should scale up/down)
    b) Account funding is from an external savings account, paid by BACS
    c) Best case 3 days loss of interest at 6.2% AER, when transferring money from the standard savings account to the regular saver.
    d) Best Case 3 days loss of interest on transferring the money out of the regular saver.
    (I have taken this as the amount of interest that would be lost if I had kept all the money in the standard savings account for a year, then transferred it out)
    Code:
    No Tax paid
    Regular Saver
    Rate 6.2% (ref) 6.5% 7% 7.25% 8% 10%
    Gain with no £99.82 £104.61 £112.57 £116.55 £128.47 £160.13 
    deductions
    Difference £0 £4.78 £12.75 £16.73 £28.65 £60.31 
    c.f. 6.2%
    rate
    With deductions £1.77 £9.73 £13.71 £25.63 £57.29 
    (c) & (d)
    --------------------------------------------------------------------------------------------------------
    20% Tax paid
    Regular Saver
    Rate 6.2% (ref) 6.5% 7% 7.25% 8% 10%
    Net Rate 4.96% 5.20% 5.60% 5.80% 6.40% 8.00%
     
    Gain with no £80.00 £83.85 £90.24 £93.44 £103.01 £128.47 
    deductions
    Difference £0 £3.84 £10.24 £13.43 £23.01 £48.47 
    c.f. 6.2%
    rate
    With deductions £1.42 £7.82 £11.01 £20.59 £46.05 
    (c) & (d)
    ---------------------------------------------------------------------------------------------------------
     
    40% Tax paid
    Regular Saver
    Rate 6.2% (ref) 6.5% 7% 7.25% 8% 10%
    Net Rate 3.72% 3.90% 4.20% 4.35% 4.80% 6.00%
    
    Gain with no £60.11 £63.00 £67.82 £70.23 £77.44 £96.63 
    deductions
    Difference £0 £2.89 £7.71 £10.11 £17.33 £36.52 
    c.f. 6.2%
    rate
    With deductions £1.07 £5.89 £8.30 £15.51 £34.70 
    
    (c) & (d)
    
    Looking at the figures, these assume that the standing orders are perfectly timed (perhaps manually tweaked) so that only 3 days loss of interest occurs.
    This makes some of the regular savers look decidedly naff. Certainly, I don't think most people would both with a 6.5% regular saver for a maximum gain of £1.77.
    Last edited by moneyandmountains; 07-07-2007 at 12:17 PM. Reason: formatting
Page 1
    • oldfella
    • By oldfella 7th Jul 07, 12:13 PM
    • 1,500 Posts
    • 573 Thanks
    oldfella
    • #2
    • 7th Jul 07, 12:13 PM
    • #2
    • 7th Jul 07, 12:13 PM
    this has been discussed before - the general view seems to be that 1 year savers at less than 8% are not worth the effort at current rates

    the big benefit is in the 2 year/multi year savers

    Mike
  • moneyandmountains
    • #3
    • 7th Jul 07, 12:23 PM
    • #3
    • 7th Jul 07, 12:23 PM
    this has been discussed before - the general view seems to be that 1 year savers at less than 8% are not worth the effort at current rates

    the big benefit is in the 2 year/multi year savers

    Mike
    Originally posted by oldfella
    Cheers Mike. I hadn't seen that discussion. Only trying to help.
    It seems strange that this isn't mentioned as a caveat in the Regular Savings Accounts: The Best Currently Available List! thread, as otherwise people may miss it.
  • Darth_Calculus
    • #4
    • 7th Jul 07, 12:56 PM
    • #4
    • 7th Jul 07, 12:56 PM
    I have been thinking exactly the same thing, moneyandmountains. It seems that as rates are going higher, saving accounts are increasing, but reg savers dont appear to be doing so, as much.

    For example, a year or so ago, I had three reg savers, A&L 10% Portman ISA 8%, and Halifax 7%. At that time, the best normal savings accounts were only about 5.00%.

    Nowadays, savings accounts are at 6.2%, but the best reg savers dont seem to have increased all that much, as they are still at 7-8%.

    Also, with Interest Rates going up every few months, a competitive reg saver at the begining of a year, can become decidedly average by the middle of the year, as normal savings accounts catch up.

    I do agree with oldfella about the multi year reg savers, however what I would really like is for there to be a reg saver where you could put in more than £500 per month. I find it a pain having ten or so different savings accounts open at the same time, just to be able to get a decent rate of interest.

    In an ideal world, I would just have 3 - ISA, Main savings, Reg saver.
  • Who? What? Where?
    • #5
    • 7th Jul 07, 1:02 PM
    • #5
    • 7th Jul 07, 1:02 PM
    It seems strange that this isn't mentioned as a caveat in the Regular Savings Accounts: The Best Currently Available List! thread, as otherwise people may miss it.
    Originally posted by moneyandmountains


    Good point. As a newbie (in the world of money matters and financial products generally actually), I am finding this particular topic very hard to follow as there is so much information all over the place.

    This particular question is an excellent example, as well as the various pros and cons associated with particular accounts or combinations (eg. security concerns or particularly effective drip-feeds).

    Kazaa's comprehensive ISA sticky really helped me get to grips with those, maybe someone could do something similar (or even a guide could be written) for savings/regular savings account combinations?

    Please excuse my brazen demands for other people to do work, and thanks to everyone out there who post loads and loads (and loads) of such great info!
  • moneyandmountains
    • #6
    • 7th Jul 07, 1:17 PM
    • #6
    • 7th Jul 07, 1:17 PM
    Kazaa's comprehensive ISA sticky really helped me get to grips with those, maybe someone could do something similar (or even a guide could be written) for savings/regular savings account combinations?
    Originally posted by Who? What? Where?
    That's what I was thinking. I had to resist the temptation to open a new regular saver yesterday, as my tax status will change in a few months.
  • Who? What? Where?
    • #7
    • 7th Jul 07, 1:20 PM
    • #7
    • 7th Jul 07, 1:20 PM
    That's what I was thinking.
    Originally posted by moneyandmountains
    Great minds moneyandmountains, great minds.

    I had to resist the temptation to open a new regular saver yesterday, as my tax status will change in a few months.
    Originally posted by moneyandmountains
    And Lordy knows what will happen with rates over the next month.
  • ukdutypaid
    • #8
    • 7th Jul 07, 1:45 PM
    • #8
    • 7th Jul 07, 1:45 PM

    Good point. As a newbie (in the world of money matters and financial products generally actually), I am finding this particular topic very hard to follow as there is so much information all over the place.

    This particular question is an excellent example, as well as the various pros and cons associated with particular accounts or combinations (eg. security concerns or particularly effective drip-feeds).

    Kazaa's comprehensive ISA sticky really helped me get to grips with those, maybe someone could do something similar (or even a guide could be written) for savings/regular savings account combinations?

    Please excuse my brazen demands for other people to do work, and thanks to everyone out there who post loads and loads (and loads) of such great info!
    Originally posted by Who? What? Where?

    Regular Savings Accounts: The Best Currently Available List
  • Who? What? Where?
    • #9
    • 7th Jul 07, 2:32 PM
    • #9
    • 7th Jul 07, 2:32 PM
    It's true that the post mentioned is an excellent guide to Regular Savers. However -

    1. Although it does refer to the issue, it does not specifically look at the best feeder accounts. SS2 did say something about incorporating this info at some point - which would be fantastic - but there weren't a lot of responses to this.

    2. At the moment important issues that don't fit in 100% with Best Currently Available Lists (ie. whether regular savers are still worth it), don't seem to come up there. Maybe this, and the above point, will change if and when it becomes a sticky?

    I PM'd Kazza and he concurred. He and others are also curious as to why SS2's thread has not been stickied, and as to why Kazza's own thread has been recently unstickied.

    What's this forum's policy on bumping? If it's not against etiquette, maybe that's a solution?

    Just to say, I am definately not disrespecting the hard work that has been clearly been put into the post in question, or indeed the whole of the Savings and Investment board. I just thought that as lots of people are looking into the feeder/regular savers system together, it makes sense to tie these up in one place too.
    • exel1966
    • By exel1966 7th Jul 07, 3:36 PM
    • 4,816 Posts
    • 11,861 Thanks
    exel1966
    The YBS regular saver, even though only at 7% (rise pending hopefully) is particularly good as it carries no time limit and allows up to £20K to be saved.
    • Jonbvn
    • By Jonbvn 7th Jul 07, 3:38 PM
    • 5,300 Posts
    • 5,574 Thanks
    Jonbvn
    The YBS regular saver, even though only at 7% (rise pending hopefully) is particularly good as it carries no time limit and allows up to £20K to be saved.
    Originally posted by exel1966
    If YBS increase the rate for their RS I think we will have to take the plunge (in OH's name for tax purposes ).
    • info addict
    • By info addict 8th Jul 07, 10:05 AM
    • 286 Posts
    • 273 Thanks
    info addict
    however what I would really like is for there to be a reg saver where you could put in more than £500 per month
    I like the Monmouthshire HERE, currently 6.50% including annual bonus, maximum £500,000. Also this account is fed by direct debit and is usually credited 2 or 3 days before the money is debited from my ICICI account - nice!

    and Principality HERE, currently 6.20% clean

    Both of these accounts allow up to £1,000 per month and roll on each year.

    I expect both accounts to pass on the recent 0.25% increase. So keep an eye out
    Last edited by info addict; 08-07-2007 at 10:16 AM.
    • bristolleedsfan
    • By bristolleedsfan 8th Jul 07, 12:25 PM
    • 7,462 Posts
    • 9,622 Thanks
    bristolleedsfan
    I like the Monmouthshire HERE, currently 6.50% including annual bonus, maximum £500,000. Also this account is fed by direct debit and is usually credited 2 or 3 days before the money is debited from my ICICI account - nice!

    and Principality HERE, currently 6.20% clean

    Both of these accounts allow up to £1,000 per month and roll on each year.

    I expect both accounts to pass on the recent 0.25% increase. So keep an eye out
    Originally posted by info addict
    those who are considering regular savers need to be considering both the rate the regular savers pay + the rate they are getting on the account they are "drip feeding" the monthly payments from against the interest that can be gained from say a 1 year fixed rate account where the stated interest rate ( which is in some cases is as high/higher than some ongoing regular savings accounts) is paid on the complete lump sum throughout the term of investment.
    Last edited by bristolleedsfan; 08-07-2007 at 5:16 PM.
    • stphnstevey
    • By stphnstevey 8th Jul 07, 6:33 PM
    • 2,720 Posts
    • 446 Thanks
    stphnstevey
    I like the Monmouthshire HERE, currently 6.50% including annual bonus, maximum £500,000. Also this account is fed by direct debit and is usually credited 2 or 3 days before the money is debited from my ICICI account - nice!

    and Principality HERE, currently 6.20% clean

    Both of these accounts allow up to £1,000 per month and roll on each year.

    I expect both accounts to pass on the recent 0.25% increase. So keep an eye out
    Originally posted by info addict
    Interesting....
  • ukdutypaid
    Not sure I'll be chasing .45% or 0.15%, even if both of them do pass the recent full 0.25% BoE increase on.
    BACS in and out, set up of account, missed payments any other !!!!-up risks. (c0ck-up, there I've beaten you system!. Really this what the world's come to. One can't use that phrase anymore without being censored)

    I might consider it for a whole balance shift, but not on a regular saver...
    With a couple of regular savers, manually tweaking the SO date, is a head ache enough as it is. Well to me anyway, prob better off being a woman, I might be able to juggle better.. lol
    Last edited by ukdutypaid; 09-07-2007 at 10:54 AM. Reason: can't believe the system auto edited the word c0ck-up
  • InMyDreams
    I think the question is a little unfair. A regular saver is not intended to be 'drip fed' into although there's clearly nothing to stop anyone doing that and it certainly used to be profitable for people with a pot of cash savings. I did it myself. Just because it's not at the moment due to the small sums involved, doesn't mean that 'Regular Savers aren't worth it' for... err... regular savers. If £250/month isn't enough then open a few, but I'm sure most people aren't in the position to be able to (or want to) regularly squirrel away thousands every month into a cash account. But for anyone wanting to save, say, up to £1k/month into cash accounts, regular savers are still very much worth it and deserve a place on this board. And these regular savers will indeed then be earning the full head-line rate on *all* their savings as no drip-feed account is involved. The only issue is really what to do with the money afterwards if you have a saver that matures or is 'full'.
    • steady__eddie
    • By steady__eddie 9th Jul 07, 5:44 PM
    • 1,443 Posts
    • 527 Thanks
    steady__eddie
    I'm currently moving about two and a half K into regular savers on a monthly basis. I pay the minimum into the average payers in order to maintain my membership and not fall into the status of a "dormant account". Every now and again when a few bob has built up, it is nice to be able to transfer to a higher paying account with the same institution without having to raid a different piggy bank and go through the rigmarole of I.D. I have opened a couple of I.S.A.s using this method.
    The other category of reg save is the higher interest payer open ended a/c. with a maximum and I include Yorkshire, Bath, Scarboro here. My theory is that when I am approaching the maximum, I will drop my payments to the minimum (£10/month) and withdraw about £800. That way, I will never go above the maximum and receive a mickey mouse rate of interest and it will only cost me £120 a year. I am aware that this will not work in the case of Bath because they don't allow you drop your monthly payments so it's a case of withdrawing £3800.
    Knowing my luck, they'll either increase the limit as I'm approaching it or the rate will become uncompetitive, in that scenario it will be a case of looking elsewhere.
    • oldfella
    • By oldfella 9th Jul 07, 6:12 PM
    • 1,500 Posts
    • 573 Thanks
    oldfella
    My approach is to use my stoozing money - so the CC companies are lending me money at 0%, which I use to fund £1500 of regular savers each month from which I earn 8-10% interest.

    Mike
    • Special_Saver2
    • By Special_Saver2 9th Jul 07, 10:32 PM
    • 1,088 Posts
    • 3,670 Thanks
    Special_Saver2
    Hi everybody. I was thinking about writing a post just like this actually and was going to check whether people had discussed it before. I have also been wondering about whether to keep my 12 month regular saver accounts going. They do involve a certain amount of effort - I have found opening and closing the Abbey accounts a little troublesome.

    I hope you do not mind but I am going to link to this post in my own thread here:
    Regular Savings Accounts: The Best Currently Available List!
    http://forums.moneysavingexpert.com/showthread.html?t=608697

    I am planning on including a section on the best feeder account (which would appear to be the Sainsbury's account) - I have posted in 2 separate threads asking people who open this account to let me know if it is suitable for this purpose. If they do, then I will include it. I will also include the Coventry First account (which I am using at the moment) but will point out clearly that this involves a first year only bonus.

    Thanks for pointing out that Principality account - I will include it in my thread and give you a credit at the top of the thread, info addict.

    I cannot believe Kazza's ISA thread has been de-stickied! It is an excellent thread! It is what inspired me to write my regular savings thread! I have posted a message on that thread asking why it has been de-stickied.
    Last edited by Special_Saver2; 30-11-2007 at 12:36 AM.
    • Special_Saver2
    • By Special_Saver2 9th Jul 07, 10:45 PM
    • 1,088 Posts
    • 3,670 Thanks
    Special_Saver2
    Info addict, I have added the Principality BS regular saver to my thread. It is not clear to me from the website whether this has to be opened up in a branch or whether you can do it by post. Can you tell me from your own experience? I also cannot see anything on the website saying that you have to live in Wales to open up an account so I am assuming there are no geographical limitations but please let me know if you know otherwise.
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