Am I missing something or is it just not worth the effort?

k42out

I was going to open three regular savings accounts that pay a fixed rate of 6% for a year. One allowed you to deposit £500 a month, the other two £250 a month. I used the calculator here http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#calculator to do the sums, and it turns out that the net increase in income would be £1.25 a month for two of the accounts and £2.50 a month for the other (as they would be dripfed from an account paying 5.1%).

My question is this. Is anyone doing this? Is it really worth the effort for such a fiddling increase. Maybe I'm missing something??? Or maybe I'm just annoyed about spending all that effort to find this out......

posted_2

It depends on the value you put on your time

rb10

What is the 5.1% account? Is this rate fixed for the year? If not, it will probably go down whilst the Regular Saver rates will stay where they are if fixed.

Mikeyorks

k42out wrote: »

(as they would be dripfed from an account paying 5.1%).

Therein lies the problem? In order to beneficially 'drip feed' the rate of the Regular Saver needs to be significantly higher than the account you're feeding from (and of any fixed term accounts). And RS rates have retreated rapidly .... meaning the benefit is now a bit tenuous. They're still fine for 'new money' direct from income .... but I wouldn't drip feed (are you really still getting 5.1%?) at current rates.

I'm 5 months into feeding a 12% Halifax RS from a 3.5% (was 6% at outset) account ... so that's a good return. But I had abandoned drip feeding when the rate disparities between RS and easy access narrowed to a couple of %. It was easier to just take the lump sum and put it into fixed rate for a year.

Bit more on the same theme :-

http://forums.moneysavingexpert.com/showthread.html?p=17274877#post17274877

Wookey

Does the interest rate drop after the year is up? Only point to regular saver accounts is as a long term investment with a decent rate return that allows for compounding interest, quite a few high rate regular saver accounts don't allow the interest earned to be placed back into the regular saver account.
Try a few of the online calculators that show the interest earned over many years, even at a lowish rate when intrest is allowed to compound on itself.