We’d like to remind Forumites to please avoid political debate on the Forum.

This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Is being a Rate Tart such a good idea?

Suppose you have a savings account paying 6% and you see another paying 6.5%. If you move all your money it will take time to actually transfer and while it is happening you get no interest. Given the speed of bank processes I think that could be a month.

Now at 6% per year you were only getting about 0.5% per month, which you've just lost by switching. So it'll take you a year in the new account to get that 0.5% back. And the new account was probably only offering the 6.5% to attract new customers and they'll drop the rate after a year.

So are you any better off?
«1

Comments

  • nzseries1
    nzseries1 Posts: 2,240 Forumite
    A month to transfer money? Four days, max.

    Two days from Savings Account 1 - Current account.
    Two days from Current account - Savings Account 2.

    If you consider the time it takes to open Savings Account 2, then your money is still earning interest in Savings Account 1 during that time.
    You're spelling is effecting me so much. Im trying not to be phased by it but your all making me loose my mind on mass!! My head is loosing it's hair. I'm going to take myself off the electoral role like I should of done ages ago and move to the Caribean. I already brought my plane ticket, all be it a refundable 1.
  • chardir
    chardir Posts: 229 Forumite
    Part of the Furniture Combo Breaker
    It takes a month to transfer an ISA but interest is only lost while the cheque is making it's way through the postal service. Ordinary savings only take a few days as above. Generally it's not worth switching for 0.1 or 0.2%. 0.5% probably is worth it.
  • DocMartin
    DocMartin Posts: 43 Forumite
    Chasing high rates has been the least of my worries over the past month or so. And it is quite an education to discover how long it actually takes to open and operationalise different accounts. Not so bad once you have the accounts open but getting to the point where you can operate them can take a while,especially the postal / telephone and even some internet accounts.
  • nzseries1
    nzseries1 Posts: 2,240 Forumite
    Hmm, I think the minimum I would switch for is probably 0.25%. Maybe 0.3%.
    Although given the Iceland banking situation, it would depend entirely on what compensation scheme they have.
    You're spelling is effecting me so much. Im trying not to be phased by it but your all making me loose my mind on mass!! My head is loosing it's hair. I'm going to take myself off the electoral role like I should of done ages ago and move to the Caribean. I already brought my plane ticket, all be it a refundable 1.
  • Gambler
    Gambler Posts: 3,312 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    If I was a rate tart I would have moved away from icesave as they were no longer the best payers. I've been with them since the start as they maintained a competitive rate and were a very easy bank to use.
  • ebyard
    ebyard Posts: 104 Forumite
    It's all about scale and risk.

    If you have a few hundred quid then it's hardly worth shifting it to make a few extra pence, but if you have a few grand or considerably more, then it's worthwhile chasing the rates.

    The final decision should be based on the new bank's security and UK FSA/FSCS status. We all stuck money into Kaupthing because they are secure upto £50k, and Icesave because we got the impression that they are also fine because of this passport system.

    Now that the passport system isn't worth the paper it's written on, we know to avoid any bank using this (and frankly, the FSA should withdraw this system and make all banks who want to do business in the UK sign up to the FSCS).

    I am a rate-chaser and I've had a scare with Icesave - but the bulk of my savings are in RBS......
  • Risk/Reward.

    £50k @ .5% = £250 pa = 0.68p a day.

    .
    Living Sober.

    Some methods A.A. members have used for not drinking.

    "A simple book for complicated people"
  • nzseries1
    nzseries1 Posts: 2,240 Forumite
    Risk/Reward.

    £50k @ .5% = £250 pa = 0.68p a day.

    .

    Don't knock it, that'll buy me my Sun and a packet of crisps each day! :D
    Seriously though, 68p a day... not much. £250 extra a year however, that's worth changing for for sure.
    You're spelling is effecting me so much. Im trying not to be phased by it but your all making me loose my mind on mass!! My head is loosing it's hair. I'm going to take myself off the electoral role like I should of done ages ago and move to the Caribean. I already brought my plane ticket, all be it a refundable 1.
  • darktrader
    darktrader Posts: 124 Forumite
    I review my savings and Investments once a year. All this switching people here talk about is not for me.
    ebyard wrote: »
    We all stuck money into Kaupthing because they are secure upto £50k, and Icesave because we got the impression that they are also fine because of this passport system...

    "We all?"

    I review my savings and Investments once a year...
  • RayWolfe
    RayWolfe Posts: 3,045 Forumite
    1,000 Posts Combo Breaker
    nzseries1 wrote: »
    Don't knock it, that'll buy me my Sun and a packet of crisps each day!
    What an excellent combination, all your nutrition and education in one simple package! ;)
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 352.1K Banking & Borrowing
  • 253.5K Reduce Debt & Boost Income
  • 454.2K Spending & Discounts
  • 245.1K Work, Benefits & Business
  • 600.7K Mortgages, Homes & Bills
  • 177.5K Life & Family
  • 258.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.2K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.