Saving Options (after ISA)

Yuzo

so there would be 2 options as for which additional savers account i go for after my ISA...

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Regular Savings - mainly a maximum of £250 per month.

Instant Access - unlimited amount of deposits.

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so why do most people go for Regular Savings? ... do these always offer higher interest rates or something?

as i am looking at saving around £900 per month, an Instant Access account looks better for me?

paulw19

Well do you need instant access? Accounts with notice periods or periods where the interest will fall if a withdrawl is made should always pay higher than instant access accounts. So you are basically making a choice between instant availability and high returns. Seeing as you are looking at a 2 year period and looking to make regular monthly savings, I think a choice of instant access over regular saver would be the wrong one. Regular savings accounts generally run for 12 months, so even putting £250 a month into this rather than an instant access will bring better return than putting the same into an ISA would (interest rate dependant obviously).

By the way, you are not limited to one regular saver account, there are no restrictions like there are with ISA's. So, for example, if you wanted to earn high interest on £500 per month, open two regular savers. Then put the other £400 into an instant access in case you need it. Seems like a no brainer to me, however, it depends on your own personal circumstance and how much money you feel you may need instant access to.

Catlover18

PinkPig wrote: »

The net annual (not monthly!) rate is 4.67%, which you need to divide by 12 to get the monthly rate. This makes about 0.39% per month, which is about 97p on a balance of £250. Since you got less than that I'm guessing that the £250 wasn't in the account for a full month at the point where you were paid interest. I think interest is added on the 1st of the month so if you opened it in the middle of the month that would explain the difference.

Remember that the amount of interest you get will increase each month as the balance increases. In the last month you'll have a balance of about £3000 and receive about £11.67 in net interest. You can expect roughly £70 or so in interest (after tax) for the whole year.

Hope that clears things up a bit. It's worth pointing out that a 6% monthly rate would be insanely high - it's equivalent to a 100% annual interest rate, which means that your money would double in a year!

The most common misunderstanding with regular savings accounts is to incorrectly expect 6% (or whatever the rate is) of the final balance to be paid in interest. The average daily balance throughout the year is about half of this, and so the actual amount of interest will be, very approximately, 3% (minus tax) of the final balance. After all, most of the money is only there for part of the year, and banks don't pay interest on money you haven't deposited yet!

If you're moving the money from an existing lump-sum into the regular savings account, make sure that the rest of the money is in a separate instant access savings account earning a good rate of interest.

If you're saving out of your salary/income then the regular savings account is all you need unless you want to save more than £250 a month.

Thanks very much for this information PinkPig - very helpful! I find all this interest rate information quite confusing!

As i have maximised my Cash ISA for this year, i am putting the rest of my money over into an e-saver with Natwest, but on about £2,500 i'm only accruing about £1.50 per month in interest so i was trying to maximise my savings by going for a higher interest account (i.e. rather than keep adding the money to the e-saver, i was under the impression that i could earn more interest by putting it into Barclay's Monthly Saver) but i'm not sure if that is the case now?

I have approx £600 per month from my wages to save so, given your knowledge, is it better to keep adding to the e-saver, or remain adding some to that and the max £250 to the Barclays savings?

Or do you know of any other good ways to maximise the interest on this amount of savings? It would need to be instant access i am getting married in Sept and need to access the money as and when up until then.

Many thanks for your help again.

PinkPig

Catlover18 wrote: »

As i have maximised my Cash ISA for this year, i am putting the rest of my money over into an e-saver with Natwest, but on about £2,500 i'm only accruing about £1.50 per month in interest so i was trying to maximise my savings by going for a higher interest account (i.e. rather than keep adding the money to the e-saver, i was under the impression that i could earn more interest by putting it into Barclay's Monthly Saver) but i'm not sure if that is the case now?

I have approx £600 per month from my wages to save so, given your knowledge, is it better to keep adding to the e-saver, or remain adding some to that and the max £250 to the Barclays savings?

The Barclays monthly savings account probably has the best interest rate of any of your accounts and the penalty for withdrawals is small, so add as much as you can (ie. the £250 per month) to that.

What's the interest rate on the e-saver? If you haven't checked in a while it's likely to be fairly rubbish. Open a better savings account (paying 3% or so - see the relevant article. Of course, make sure it's instant access since that's one of your requirements.) and put the rest of your money there instead.

Also remember that you can subscribe another £3,600 to an ISA in the new tax year, which is very soon now. Again, check the appropriate article for the best deal. Finally, remember that you can transfer your ISA between providers, so it's worth checking whether you can get a better deal than you have at the moment.

Yuzo

thanks for all help everyone.

as we are so close to 5th April, i think i will review my situation when i have filled next years ISA, as it will take me about 4-5 months to get this filled anyway.

looks like i will be opening 2 regular saver accounts, at £250 each per month.

... then i will put any remaining money into a instant access savers account... should i need quick access to some money.

i dont think i could commit to 3 regular saver accounts, just encase my overtime suddenly stopped or any unexpected bills, etc.

Catlover18

PinkPig wrote: »

The Barclays monthly savings account probably has the best interest rate of any of your accounts and the penalty for withdrawals is small, so add as much as you can (ie. the £250 per month) to that.

What's the interest rate on the e-saver? If you haven't checked in a while it's likely to be fairly rubbish. Open a better savings account (paying 3% or so - see the relevant article. Of course, make sure it's instant access since that's one of your requirements.) and put the rest of your money there instead.

Also remember that you can subscribe another £3,600 to an ISA in the new tax year, which is very soon now. Again, check the appropriate article for the best deal. Finally, remember that you can transfer your ISA between providers, so it's worth checking whether you can get a better deal than you have at the moment.

Once again ,thanks for the great advice.

I am now in the process of trying to source a better savings account - thinking of Yorkshire BS, which pays 2.75% AER, as opposed to Natwest's e-saver at 1.1% AER! It also allows me to accrue monthly interest, which for me is even better.

I shall continue to pay into the Barclays Regular Saver and i will open a new ISA for 2009/2010 and then transfer my old ISA money into this as well.

Thanks for helping me to clarify my finances and get them in order.