Halifax Children's Regular Saver

mcm59

The Halifax Children's Regular Saver is mentioned as one of the best buys for a 12-month saving plan for kids. However, now that the 12 month period of saving is over, I have just received the balance. The 10% interest rate was applied on a daily basis - it is not applied at the end of the period. This translates into a 5.11% interest over the period, which is then taxed at 20% and you have to reclaim that back using an R85 form.

So, perhaps, still a good rate of interest but not as attractive at it first looks.

Now that has fallen to 8% according to the Halifax website.

rb10

mcm59 wrote: »

The 10% interest rate was applied on a daily basis - it is not applied at the end of the period.

This is the same as with nearly every savings account, whether a regular saver or not. Say, for example, that you had an instant access account paying 3%, and kept £1 in it for a year, and then you put £10000 in the day before interest was paid, would you expect to get 3% of £10000? No, because interest would be calculated daily, taking into account the 364 days of only have £1.

This translates into a 5.11% interest over the period

Which bearing in mind that Halifax only had your money for, on average, half the year, makes this an incredibly good account!!

is then taxed at 20% and you have to reclaim that back using an R85 form

You could have told them when the account was opened that tax was not to be paid ... then there would be no need for this as the interest would have been paid gross.

Now that has fallen to 8% according to the Halifax website.

Which is still way higher than you can get from most accounts!!

opinions4u

mcm59 wrote: »

The Halifax Children's Regular Saver is mentioned as one of the best buys for a 12-month saving plan for kids.
It has a very competitive rate, so should be.

However, now that the 12 month period of saving is over, I have just received the balance. The 10% interest rate was applied on a daily basis - it is not applied at the end of the period.
Did you seriously excpect them to pay you interest on money for the days that they didn't have use of it? Where was the money before you gave it to them? Did it not earn interest elsewhere?

This translates into a 5.11% interest over the period, which is then taxed at 20% and you have to reclaim that back using an R85 form.
Which is how the Inland Revenue makes them operate. You are responsible for your own tax affairs. Not your bank. Your 5.11% is not an AER so is not a fair comparison with other rates.

So, perhaps, still a good rate of interest but not as attractive at it first looks.
It does exactly what it says on the tin. It never ceases to amaze me that people think it will do anything different.

Now that has fallen to 8% according to the Halifax website.

Still well worth conidering at 8%. They have only dropped rates 2% when most of their savings rates have taken the full 3% hit.

Mikeyorks

At least the OP has kept it bland .... but she'll find it easier reclaiming the tax with an R40. But it did take me back to the earlier days of Reg Savers when these threads were an almost daily event :

http://forums.moneysavingexpert.com/showpost.html?p=4159743&postcount=9

realaledrinker

Don't be too hard on the OP. This misconception is regularly floated by so-called financial journalists in the weekend Money sections.

spellinn

I applied for a regular saver when the rate was advertised as 10%, however when the paperwork came through, it was the new rate of 8%.

Do I have any grounds to get it back to 8% as it's a fixed rate, and was 10% when I applied?

Cheers

Neil

rb10

See the T&Cs, they say that the rate is fixed upon funding the account, and not on application.

So if you don't want the 8% rate, don't put any money in and the account will close. But 8% is still a great rate, so I would personally use it while it's still there!