Should I ditch my current Halifax Reg Saver

Steffan

I currently have a regular savings account with Halifax which I opened on the 19th Dec 07 with £250 a month going into it, so now it's at £1750 and I think a 7% interest rate.

I have two options but not sure which would be best

1. Up the account to £500 a month and let it mature in December.
2. Close the account, take a penalty charge and only get £19 worth of interest and open the new 10% regular savings account?

What should I do as I can only have one of the regular savings account open?

fablad75

This is from someone who seems to know what he's talking about:

Dagobert wrote: »

As has already been stated in post #98, the 12% interest option can be discounted as Halifax do not offer a savings account with a high enough interest rate for the £5000 lump sum to make it worthwhile. Therefore, the following calculations can be based on the 10% option.

Gain from 10% regular saver versus investing £6000 in a 7% 1-year bond:

assuming 6.25% feeder account with Faster Payments option (such as Tescos Internet Saver) and installments 2-12 on 1st of month
£86 if starting if opening on 9th June, £92 if opening on 20th June

Break-even point for cancellation of 7% regular saver

This has to be a rough calculation as early closure will turn the regular saver into a variable rate web saver, currently at 4.36%. Rates were reduced several times last year. I will choose a consevative approach basing the calculations on the lowest rate of 4.36%.

If the regular saver is fed at regular monthly intervals, an average of £1625 is in the account during a 1-year investment period
£250 * (12*13)/12 = £1625
If the account was opened at the end of the month and fed on every 1st, the average increases to £1845:
£250 * (12 + 12*13/2 - 1) = £1845

Early closure will drop the interest rate by approx 2.64%.
The 7% regular saver will yield at most £130 interest during the full investment period (based on highest possible average balance):
£1854 * 7% = £130
Dropping the rate to 4.36 on the day before maturity:
1854 * 4.36% = £81
Therefore the greatest possible loss of early closure is £49. This is lower than the lowest possible gain of the 10% regular saver.

Conclusion: regardles how far into the 7% regular saver period you are, the 10% saver is worth an early closure.

Dagobert

Thank you fablad75. I was just about to search for this post.

As it turned out after I had written post #98, the 12% option is worthwhile in conjunction with Halifax Guaranteed Saver (Reward version at 6.25%).