Halifax Guarenteed 10% Savings Question

hushpuppy

Dear All,

Following a recommendation posted on MSE I went into my local Halifax and opened the Guarenteed monthly savings account, promising 10% P.A, with a maximum deposit of £500 pm.

Now all along I thought that the 10% interest was applied to the total amount one had saved over the 12 month period, in my case £4K, so I was a little shocked to find out that the interest actually accures monthly and is then applied annually.

Thinking back I am sure that I understood this from the chap in the branch who explained the benefits of the account, as otherwise I wouldn't have tried to put in as much as I could afford every month, if I had known that the interest wasn't applied to the total amount at the end of the year.

I realise that there were no doubt T&C's and also checking the account information online all it mentions is interest is applied annually.

So was this just me that mis-understood the way this account worked?

matthew74

Any money in the account gets 10% for as long as it was in there. You have misunderstood the account, you are not alone!

If you saved £4000 evenly over the year you should get about £200 in interest before tax. Would you have got that return elsewhere??

Charlton_Taz

Its not just you - going from previous threads on this board many people misunderstand this concept. Essentially, you can only ever earn interest on money when it is in the account i.e. you can't expect to earn a year's worth of interest on money that you only deposit in the account for, say, one month. The 10% figure you were quoted (and its the same for all savings accounts) is an annual figure.

Jake'sGran

I get really angry about these monthly savers and think you are not the only one to get the wrong impression about how much you will get at the end of the first twelve months. Who said banks are getting better at the way they treat savers? I think the small print in the ads should explain it to potential clients.
No one is paying 10%.
The best I have managed lately is 3.87% on a bond for one year.
The monthly saving accounts calculates the interest with regard to how long it has been in the account. Your last payments will only have been there for a short time and the first £500 will be the only one in the account for 12 months. This subject has been covered quite often in the past so you may find exactly how to do the calculation if you back on this forum or, Martin may have it listed in the beginning of this section.

matthew74

I disagree strongly, I think these regular savers are great value and not in any way misleading. You would need a fixed rate bond of about 5% to match a monthly saver of 10%.

ctdctd

matthew74 wrote: »

I disagree strongly, I think these regular savers are great value and not in any way misleading. You would need a fixed rate bond of about 5% to match a monthly saver of 10%.

Hear Hear,

I had the 12% RS and got £326 gross interest over the year on a total of £6500 invested. When the £6500 was not in the RS it was earning, on average, 4% gross in a instant saver giving an additional £120 approx.

This gives £446 on £6500 over a year which is 6.9% gross with near total safety and much more flexibility than a 1 year bond. Beat that anywhere else.

RayWolfe

Jake'sGran, you have been around these parts long enough to understand how these work. If it says 10%, it means 10%. No catch, no tricks ... lots of education needed. But is that really the job of the banks?

hushpuppy

RayWolfe wrote: »

Jake'sGran, you have been around these parts long enough to understand how these work. If it says 10%, it means 10%. No catch, no tricks ... lots of education needed. But is that really the job of the banks?

Ray, I think that you are being a bit unfair both to Jake'sGran and I.

Clearly from the number of people who have mis-understood, or indeed maybe even misled by the Banks ambiguous way it sold this product, I cannot agree that 10% does actually mean 10% as in my case it worked out at about 4%.

So in my opinion the banks should be crystal clear on what their products actually are, otherwise aren't they simply having the un-educated over?

matthew74

No I can assure you it is 10% !!

YorkshireBoy

hushpuppy wrote: »

Ray, I think that you are being a bit unfair both to Jake'sGran and I.

If you were buying a car would you take a mechanic, or a friend who knew a little about cars, with you? Of course you would. I suggest if you cannot understand small print, and the basics of banking/saving/interest, you do the same the next time you're thinking of applying for a financial product.

Clearly from the number of people who have mis-understood, or indeed maybe even misled by the Banks ambiguous way it sold this product, I cannot agree that 10% does actually mean 10% as in my case it worked out at about 4%.

And had you saved your money in an 'ordinary' savings account you would have seen a return of 2% (half the 'advertised' rate of 4%). I know where I'd rather have my money...do you?

So in my opinion the banks should be crystal clear on what their products actually are, otherwise aren't they simply having the un-educated over?

The savings calculator on the Halifax website is very "crystal clear"...

http://www.halifax.co.uk/savings/calculator/calculator3.asp?page=results&ver=hfx&A=&M=500&n=1&i=10&submit=Calculate

Nice of them to provide it as a guide...don't you think?

YorkshireBoy

hushpuppy wrote: »

I was a little shocked to find out that the interest actually accures monthly and is then applied annually.

Interest accrues daily, not monthly, as it says in the account T&C's.