Birmingham Midshires

batleyboy_2

Going to open BM e-saver account , read all the terms and noticed that it said that the interest would be paid monthly but cannot be paid into the e-saver account but to another linked bank account. Does anybody know the reasoning behind this as i have noticed a few other banks opperate this system on similar accounts

opinions4u

It allows them to quote an AER that is high, but as you can't capitalise the interest back in to the account, you can't actually receive it!

This effectively makes the real rate you get closer to the gross rate quoted (6.33% from memory).

Still, it's a decent rate for easy access and if you send your interest straight back after receipt you can up that slightly.

batleyboy_2

Thanks for that, so is the BM account which states 6.52% AER , 6.33% GROSS better than the Intelligent Finance account that states 6.4% AER/GROSS. Getting confused by it all, thanks for any advice

opinions4u

batleyboy wrote: »

Thanks for that, so is the BM account which states 6.52% AER , 6.33% GROSS better than the Intelligent Finance account that states 6.4% AER/GROSS. Getting confused by it all, thanks for any advice

Mighty close to be honest.

It depends what rate you earn on your interest once it has left BM. as the figures are so close I'd say 0.01% difference is 10p on every £1000 a year. Not worth worrying about.

I prefer the IF account because I don't want my interest paying away from my savings. I'd spend it which would defeat the object of having saved.

If you choose IF then just keep an eye on the rate - it may fall over time - not because it's IF but because that's what banks do!

Another option is Egg at 6.3% fixed for a year - but that promises to drop by 1.55% at the end of the year, so it would be time to shop round again then!

batleyboy_2

Thanks, but would it make any more difference if i were to repay the interest back into the BM account

opinions4u

batleyboy wrote: »

Thanks, but would it make any more difference if i were to repay the interest back into the BM account

Yes, but you need to be careful how long the money is in transit for. If it takes 3 working days to reach the receiving account and 3 working days to get back to BM then you've earned no "interest on interest" for 20% of the month. Longer around bank holidays and weekends.

May be open the BM account and remit the interest in to an IF account?

Limes

But surely then isn't it better just to put it all into IF in the first place? You earn a slightly higher rate of interest and don't have to worry about losing out on days in transit? 10p in every £1,000 is still 10p extra.