whats the highest % you have ever been paid for your savings in your life

dave0000

whats the highest % you have ever been paid for your savings in your life mine is only 3.55% natwest isa plus but i have only had 2 savings accounts and only been saving for about 6 months the other pays 1.10% befor tax if i can only earn 3.55% how come the banks can earn 10 or 15% on lending my money out i think if they lend it out at 10% they should pay me 6.45% and they earn the 3.55% because its my money do you agree

turbobob

7% with Close Brothers is highest I've personally had, and that one of the last high rates available late last year. I wasn't into saving when the base rates were really high back in the early 90's and before, so I've got no knowledge of what they were like then...

7sefton

I remember when I was a kid I got 6.95% gross with a Nationwide smart account. Around the same time, when they launched their e-savings account, that paid 7%. How things change!

Bonbon

I can't remember exactly, but I received 12% or 14% in the early 1990's from Nationwide building society. It sounds great but my mortgage rate was about that as well.

dunstonh

do you agree

no. And the figures dont back you up either.

The net interest charge for banks is typically around the 2-4% range in normal times. Its much lower than that at the moment for many banks. I read that one of the UK banks was running at 0.9% currently. (note: do not mix up net interest charge to mean its to do with tax. It is the term that reflects the effective implicit charge. It is more often known as the net interest margin nowadays but also has other similar names).

The thing you are fogetting is costs and the increase in failed or failing loans and the fact interest rates are so much lower and that the banks have to find ways to improve their capital adequacy. The difference on 2% to 3% is 50%. A difference of 1% to 2% is 100%.

opinions4u

dave0000 wrote: »

whats the highest % you have ever been paid for your savings in your life

12%.

if i can only earn 3.55% how come the banks can earn 10 or 15% on lending my money out

1. Branches cost money to maintain.
2. Call centres cost money to maintain.
3. Web sites cost money to maintain.
4. Staff tend to appreciate being paid a wage.
5. Marketing accounts costs money.
6. Incentivised pricing to attract new business (e.g. 0% credit card rates) have to be priced in.
7. Typical mark up on a mortgage is traditionally 2% more than a savings account will pay. While personal loans and credit cards carry higher rates, point 8 explains why.
8. On top of that, banks need to price in the risk of default - if your margin is only 2% and 3% of your loans don't get repaid, then you go bust.
9. Shareholders tend to like to see a dividend and a share price that increases.

i think if they lend it out at 10% they should pay me 6.45% and they earn the 3.55% because its my money do you agree

No. It's a naive point of view. If they are paying you 3.55% in the current climate they are making a loss on your money. Other ISA customers with Nat West, who have been loyal to them, are only earning 0.1%. They are subsidising your high rate and could argue that you should give some of your interest to them.

dave0000

opinions4u wrote: »

12%.


1. Branches cost money to maintain.
2. Call centres cost money to maintain.
3. Web sites cost money to maintain.
4. Staff tend to appreciate being paid a wage.
5. Marketing accounts costs money.
6. Incentivised pricing to attract new business (e.g. 0% credit card rates) have to be priced in.
7. Typical mark up on a mortgage is traditionally 2% more than a savings account will pay. While personal loans and credit cards carry higher rates, point 8 explains why.
8. On top of that, banks need to price in the risk of default - if your margin is only 2% and 3% of your loans don't get repaid, then you go bust.
9. Shareholders tend to like to see a dividend and a share price that increases.

No. It's a naive point of view. If they are paying you 3.55% in the current climate they are making a loss on your money. Other ISA customers with Nat West, who have been loyal to them, are only earning 0.1%. They are subsidising your high rate and could argue that you should give some of your interest to them.

i no they have to pay out alot but its not there money its savers so they lose nothing if they go bust
how are they making a loss if there earning 6.45% and who as 0.1% isas i have never seen one that low do you work for the bank of england
wow 12% interest when will it get that high again

dave0000

dunstonh wrote: »

no. And the figures dont back you up either.

The net interest charge for banks is typically around the 2-4% range in normal times. Its much lower than that at the moment for many banks. I read that one of the UK banks was running at 0.9% currently. (note: do not mix up net interest charge to mean its to do with tax. It is the term that reflects the effective implicit charge. It is more often known as the net interest margin nowadays but also has other similar names).

The thing you are fogetting is costs and the increase in failed or failing loans and the fact interest rates are so much lower and that the banks have to find ways to improve their capital adequacy. The difference on 2% to 3% is 50%. A difference of 1% to 2% is 100%.

i dont get this The difference on 2% to 3% is 50%. A difference of 1% to 2% is 100% what does that mean 1 to 2% is 100% and a higher difference 2 or 3% is 50%

withnell

dave0000 wrote: »

i no they have to pay out alot but its not there money its savers so they lose nothing if they go bust
how are they making a loss if there earning 6.45% and who as 0.1% isas i have never seen one that low do you work for the bank of england
wow 12% interest when will it get that high again

Every bank has accounts paying rates arond 0.1%. Nationwide's current rate for e-savings is currently below half a percent.

If you read the posts above it's quite clear how they can make a loss, but to put it into numbers:

Bank A has £1bn of savings, and earns £64.5m from them (based on your figures)

Their branch network, call centre etc cost them 60m a year

That leaves £4.5m over - but what about all the people defaulting on their loans? Thet's say 0.5% of the invested amount -> £5m

Then there's all the people reclaiming over limit and unpaid item fees - so that £0.5m loss gets a lot bigger

opinions4u

dave0000 wrote: »

i no they have to pay out alot but its not there money its savers so they lose nothing if they go bust

The shareholders own the company. If the bank goes bust the shareholders lose their investment in the shares.

how are they making a loss if there earning 6.45%

Let's say £100,000 is invested by savers at 3%.

The bank lend 10 customers £10,000 each at 10% interest.

One of those customers disappears and never pays them back.

The bank owes it's savers £103,000, including interest.
The remaining nine borrowers pay back their £90,000 + £9,000 in interest.

The bank has lost £4,000 (£99,000 minus £103,000).

That £4,000 has to be taken from their capital reserves, which is effectively their shareholders' money.

and who as 0.1% isas i have never seen one

http://www.halifax.co.uk/savings/variable-rate-isa.asp (the biggest providers of cash ISA).

do you work for the bank of england

No, but my grandfather and aunt did.

wow 12% interest when will it get that high again

Currently earning that on a Regular Saver account with Halifax. New customers will only get 4% though.

i dont get this The difference on 2% to 3% is 50%. A difference of 1% to 2% is 100% what does that mean 1 to 2% is 100% and a higher difference 2 or 3% is 50%

If the interest margin is 2%, the bank will make a £2,000 profit on £100,000 of savings/lending.
If the interest margin is 3%, the bank will make a £3,000 profit on £100,000 of savings/lending.

£3,000 is 50% more than £2,000. I'll let you do the other sums.

agsnu

dave0000 wrote: »

wow 12% interest when will it get that high again

12% interest is no good if the cost of living is increasing at the same rate or higher, though, is it?