Sending money to Kaupthing Edge

cheekykid

LongTermLurker wrote: »

Compounding is the effect of earning interest on interest. If you got 1% interest every day (a likely story!) and put in £100k on Monday morning, then at the end of Monday you would have earned £1000 interest and would now have 101000 (no, that's not binary )
Tuesday morning you start with 101k and earn 1% (£1010) so by the end of Tuesday you have £102,010

Wednesday earns you £1020.10 in interest, and at the end of the day you have £103,030.10 and so it goes on. By Friday your £100k has grown to £105,101.

AER is the effect of compounding; it's like saying "deposit your money, add interest every day, keep earning interest on the interest you've already earned and the AER is the total interest you'd earn over the year as a proportion of what you initially deposited" - hope that helps.

With £100k, you could be right - my (very simple and inaccurate) example showed that more than £70k could be enough to make the fee less than 3 days' interest. Sorry, you're right about the current account interest having no relevance - I was working on the money still earning interest at a lower rate

Must admit, with £100k, I wouldn' be putting it in just one bank though, because if anything goes wrong you're only guaranteed to get £35k back and the rest is a bit of a gamble - you'd be better splitting it between 3 banks, but that's your decision.

Thanks for the explanation. It's clear in my head now:j

As for your last point I don't think its realistic to go about assuming that any bank might go bust. I've got over 250k in savings and I know many who have twice that if not more. It isn't really practical to open 15 accounts and I doubt many do. Am sure there are tons of people with over 200k savings. What do they do?

As for Bearns bank in the US that gone bust I don't think that all those normal people who had money there just lost their savings? I didn't hear anything to this effect. Have people actually lost their actual savings?

LongTermLurker

cheekykid wrote: »

Thanks for the explanation. It's clear in my head now:j

As for your last point I don't think its realistic to go about assuming that any bank might go bust. I've got over 250k in savings and I know many who have twice that if not more. It isn't really practical to open 15 accounts and I doubt many do. Am sure there are tons of people with over 200k savings. What do they do?

As for Bearns bank in the US that gone bust I don't think that all those normal people who had money there just lost their savings? I didn't hear anything to this effect. Have people actually lost their actual savings?

I agree that paranoia isn't the way forward, but I'm not saying assume the worst, I'm saying consider the worst. If you have £250k and put £100K in KE, if KE went under (forgetting interest) you could lose £65k, which is 26% loss - in investment terms, that would be classed as fairly high risk, compared with cash's perceived ultra low risk. As you say, opening 15 accounts isn't practical but some diversification is still good.

Don't know about the Bear Sterns fallout as I don't follow things that much, but they are US and very different to what would/could happen in the UK.

cheekykid

LongTermLurker wrote: »

I agree that paranoia isn't the way forward, but I'm not saying assume the worst, I'm saying consider the worst. If you have £250k and put £100K in KE, if KE went under (forgetting interest) you could lose £65k, which is 26% loss - in investment terms, that would be classed as fairly high risk, compared with cash's perceived ultra low risk. As you say, opening 15 accounts isn't practical but some diversification is still good.

Don't know about the Bear Sterns fallout as I don't follow things that much, but they are US and very different to what would/could happen in the UK.

The day a UK bank goes bust with all customers losing their savings is the day am legging it from the UK for good.

cheekykid

LongTermLurker wrote: »

It's not an agreement with the state; that would come under international anti money laundering regulations, which all UK banks are legally obliged to follow.

What is the trigger value that will begin investigations? if there is such a thing

Surely banks must have some "relation" with the state's tax authorites? otherwise what if I have 5k a month hitting my account and officialy i declare myself poor to the state? They can't find out unless! they check my bank accounts therefore I assume that they do random checks to catch tax evaders who declare nothing or what else?

(sorry am kinda newbie to these things)

isofa

I imagine as per an earlier post, it depends on the normal movements of money by a customer. If you are wealthy, have (for example) business, investment and other accounts with a bank, you are probably moving thousands about regularly. If you aren't and only pay in a small salary, often overdrawn, and suddenly make a one off deposit of tens (or hundreds!) of thousands, this will trigger unusual activity on the account, and they'll run some checks.

You sound really paranoid cheekykid! If you need to prove where the money came from: a Will, a win, whatever - just take the proof in; if not, don't worry about it, if they run some checks and there is nothing suspicious, there will be nothing to worry about

Banks pass on all interest payments details to HMRC, so it's easy to find out if someone is fiddling the state.

cheekykid

isofa wrote: »

I imagine as per an earlier post, it depends on the normal movements of money by a customer. If you are wealthy, have (for example) business, investment and other accounts with a bank, you are probably moving thousands about regularly. If you aren't and only pay in a small salary, often overdrawn, and suddenly make a one off deposit of tens (or hundreds!) of thousands, this will trigger unusual activity on the account, and they'll run some checks.

You sound really paranoid cheekykid! If you need to prove where the money came from: a Will, a win, whatever - just take the proof in; if not, don't worry about it, if they run some checks and there is nothing suspicious, there will be nothing to worry about

Banks pass on all interest payments details to HMRC, so it's easy to find out if someone is fiddling the state.

Not really paranoid, just trying to find out how it works.

If my interest income per year is 10k and I send an R40 to claim tax paid back for the first 6k who is going to find out if I lie about my income or not? When they get the form do they check the accounts related? We assume that there is more income from freelance jobs but it is non stated in the R40 form.

I have been a low depositors for 8 years and suddenly I got 300k. Nobody asked me anything:shocked: . I doubt how tight the security measures for black money are.