*Help with an interest rate query for nationwide account*

isayhello

Hi all,

I'm a first time poster here and i'd like some help trying to understand something about interest rates.

I have some savings with Barclays, which are in a really poor account, earning only 0.1%. I've decided to open a nationwide esavings account. The rate isnt the best but at 1.45% its better than what i currently have. (If anyone has any personal recommendations for another instant access account for a balance of 20k that would be great).

Im used to getting interest on a monthly basis but this account pays it annually in march, so what would happen say in march 2010 if i moved most or all of my money out of this account before then? would i lose all my interest if i closed the account or would they pay it when i close? or if i go from a balance of 10k to 1k, by march 2010 how would my interest work out?


Thanks for any help, it just seems a little confusing to me.

orangeslimes

they will still calcualate the interest in the same way as if you received it monthly - i.e. if you have 10k in there for 6 months you will get 6months worth of interest for it. I am sure they must give it to you if you close the account too.
As for other accounts- i just moved most of my e-savings to Yorkshire building society internet saver as its rate is double NW- so far seems good (although i have only had the account 5 days)

CLAPTON

Interest is calculated on the daily balance, each and every day.
Whether accounts are monthly or yearly merely says when they actually add the interest to your balance.

If you close the account early then you get the interest accrued up to that date.

G_M

If you can be bothered, there is actually an arguement for having an account which pays interest annually (normally a higher rate than the equivelant monthly-paid rate), and closing it after 6 months. You then receive your interest early so can open a new account with a larger capital amount. It's called compounding your interest. Monthly rates a lower for exactly this reason - Each month you receive interest which compounds up so that next month your capital is bigger.

Lansdowne

To open a Nationwide e-saving you first have to have Nationwide Flex account.
That took some time when I did it a year ago and I missed the advertised rate as it had lowered before the Flex was live online. Also I suspect it would be quicker to open the Flex in a branch rather than online.

Hungerdunger

isayhello wrote: »

I've decided to open a nationwide esavings account. The rate isnt the best but at 1.45% its better than what i currently have.

You need to bear in mind that the rate on the e-savings account generally mirrors the change in BoE Base Rate, so you can expect it to drop to 0.95% or thereabouts on 1 March.

isayhello

hey orangeslimes, thanks for the tip, how was the process for opening your ybs account? did it takes ages, was it a hassle?

thanks

isayhello

If you can be bothered, there is actually an arguement for having an account which pays interest annually (normally a higher rate than the equivelant monthly-paid rate), and closing it after 6 months. You then receive your interest early so can open a new account with a larger capital amount. It's called compounding your interest. Monthly rates a lower for exactly this reason - Each month you receive interest which compounds up so that next month your capital is bigger.

Does this mean that in the end, that 12 monthly interest payments or 1 annual interest payment on an account would amount to the same, if no money was taken out?

Exceller8

isayhello wrote: »

Hi all,

I'm a first time poster here and i'd like some help trying to understand something about interest rates.

I have some savings with Barclays, which are in a really poor account, earning only 0.1%. I've decided to open a nationwide esavings account. The rate isnt the best but at 1.45% its better than what i currently have. (If anyone has any personal recommendations for another instant access account for a balance of 20k that would be great).

Im used to getting interest on a monthly basis but this account pays it annually in march, so what would happen say in march 2010 if i moved most or all of my money out of this account before then? would i lose all my interest if i closed the account or would they pay it when i close? or if i go from a balance of 10k to 1k, by march 2010 how would my interest work out?


Thanks for any help, it just seems a little confusing to me.

Hi ish you might want to follow this link to find out what is avaliable
on martin's:money: instant access savings page.XLR8:hello:

http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

Exceller8

Hello again isayhello

Do you need access to all of that money in the next year?:think:

If not, do you have a cash ISA for this financial year? April08-April09.
:idea:
You can (if you are a tax payer) get Tax free interest on up to £3600 on your money for this finacial year and top it up in April 09 with another £3600 = £7200 earning interest daily on the balance Tax free.

i'd like some help trying to understand something about interest rates.

Interest rates = You put £100 in to an account for 1 year @ 2% interest at the end of the year you get £2 interest minus 20% tax = £1.90 added to your account balance. (i think my figures are right if not someone will correct me i'm sure) :hello:XLR8 hope this helps, I know you did not ask about ISA's but it's a good way to make your money work better for you not the tax man.

rb10

Exceller8 wrote: »

Interest rates = You put £100 in to an account for 1 year @ 2% interest at the end of the year you get £2 interest minus 20% tax = £1.90 added to your account balance. (i think my figures are right if not someone will correct me i'm sure) :hello:

I'm afraid it's not as good as that: 20% of the £2 interest that would be paid is actually 40p, not 10p, so you actually only get £1.60 added to your account. (If you are a higher rate taxpayer, you'll have to pay yet more later).