Alliance & Leicester reg savings 10%, what do you think of this plan?

mary

yes, that's it

notken

OK, on this whole "10%" thing, can anyone actually confirm that you're getting 10% interest? I can't make sense of A&L's web site, inasmuch as whether you are paid (effectively) 10/12% per month on the balance but don't actually get that interest until the account is closed (which typically will be after 12 months), or whether you just get 10% of the balance once the account is closed.

Sorry, I'm probably making that just as confusing as their Web site is. But look at it this way:
10% compound based on the balance each day, but paid at the end of the year really is 10%
10% just paid at the end of the year is actually about 5.6% (or so) compound, which, while pretty good, isn't that special

I've probably expressed that very poorly. Can I try again?
Simply put, is the 10% interest compounded on interest you would have earned during that 12 months, the way a 'normal' savings account would work, or just 10% on the initial investment? Which, as I've stated, isn't the same (or as good) as using a 'normal' savings account that pays 10%.

My head hurts.

Cheers,
Steve

steveksullivan

Good point Notken ..... I think everyone is assuming 10% compound .... however I would like it clarified too having just opened the account.

Potentially the best part of the deal, as Martin says, is the £50 'recommend a friend' deal on the current account - as the website clearly says you can do this as many times as you like .... and it doesn't take long before this far exceeds 10% interest on an average savings balance over the year of only £1,250

isasmurf

Interest is calculated on the account balance at 0.027% a day (10%/365 days). Only interest paid at the beginning of the account will truly receive 10% interest over the course of a year.

Money deposit in month 2 will receive interest equivalent to 9.15% (10%/(365-31)) because it will only be in the account receiving 10% gross for 11 months.

However, having said that. You will always be earning more interest on a daily basis compared with any savings account.

charlieboycat

isasmurf wrote:

Money deposit in month 2 will receive interest equivalent to 9.15% (10%/(365-31)) because it will only be in the account receiving 10% gross for 11 months.

I think this should read 9.15% = 10% x (365-31)/365.

I agree that the real point is that Gross rate = AER = 10% regardless of how long any particular deposit is in the account for.

notken

Thanks everyone for clarifying that. It's good to know it is 'proper' 10%, not 'fake' 10%. As you say, referrals are the way forward, and now I know that I can say it's proper 10%, I won't feel like I'm convincing people with the wrong info!

Cheers,
Steve