First Direct E Savings Interest

lindabea

Although this account pays 5% gross interest, I am not sure if the account is worth having. Apparently, you do not receive any intersest in the month you make a withdrawal or close ther account. This could be a loss of at least £80.00 in interest on an investment of 20K. This is a far greater loss than an account paying a gross interest of say 4.50% to 4.75%. What is the general opinion about this account? Or am I being too negative here?

charlieboycat

It's a definite catch for the unwary - or those caught needing to access their money at short notice. But ok provided you are disciplined enough to withdraw the entire balance in one go on the 1st of a month.

Dagobert

lindabea wrote:

Although this account pays 5% gross interest, I am not sure if the account is worth having.

It really depends how you use it, see FirstDirect eSaver - get the full 5%!

Also beware that you only get 5% if you leave the money in the a/c for a whole year as 5% is the AER, not gross interest. Only once compounded for a whole year do you reach [almost*]5%.

*I say almost, because a tax-payer gets very slightly less, see monthly interest leaves tax-payers out of pocket.

batty_2

what ever, but its worth having the account just for someone picking the phone up in two rings, and then finding someone british on the other end.

smartyarty

I think there is a key point on how to run this account to maximum advantage, especially for anyone with a large deposit with the most to lose:

- Dont ever every withdraw money except on the 1st of a month. i.e. treat the account like a maximum 30 day notice account
- When you withdraw take out the whole lot except a £1 or the minimum balance
- Transfer the money you need to your current account (whoever that is with) and transfer the rest to another online savings account (or First Direct's bonus savings account)
- On the 1st of the next month pay your savings money back into the 1st Direct e-savings account

I may be missing the point but with a few transactions as outlined above this seems an easy way to mitigate much of the loss of interest (clearly transferring will take a few days each time unless it is to the 1st Direct Current/Savings Account).

I intend to do this on mine if I need the money.

Hope this makes sense

skiddy2k

^^^^ good point.. never thought of that! i just leave my money in my savings account, never touch it... have enough in current already.
linda, firstdirect is a great bank! great service, people on the phone are extremley polite and helpfull and have never had a problem with it. online account also fairly-easy to use.

baldbloke_2

Just to add & agree ...
Rarely have I come across such a professional and helpful telephone service -I half-dreaded activating my account and was very impressed -it certainly does First Direct credit.
I shall be trying this 'all out bar £1 and then wait 30 days to reverse it' technique shortly. Presumably seeing this happen so often you'd think FD would reconsider their policy - but if it keeps the interest rate high no-one will mind too much if they don't.

Milarky

If you are partnered - and have a joint First Direct current account you can hold an E Saver account in each sole name and link both to the one account.

As stated, always withdraw on 1st of each month - or not at all in that month - the balance less £1. Then make an instant deposit for the difference between this amount and the amount you wanted to take out (say £100) into the second E Saver. The next time you want to make a withdrawal you reverse the direction of travel - moving cash from the second account to the first via the current account.

Caped_Avenger

And one final (albeit very minor) point.

Don't worry about leaving any minimum balance of £1 in the account. Leave it at zero if you want. FD won't close the account down just because you've taken all the money out of it.