Thinking of opening a saving account,but with who?

Makemerich

Tomorrow I'm off down Birmingham as most of the banks are based in Brum,I want to open a Savings account for a car,putting in roughly 100-150 every 2 weeks but who should i go with?

grumbler

See Regular Saver and Instant Access links in the blue box above. The simplest regular saver is 7% with Halifax (max £250 p.m.). If you are a taxpayer it is woth considering mini cash-ISA too.

Milarky

I'm going to suggest an ongoing regular saver alternative. Scarborough Building Society pays 6% (variable) on amounts upto £250 per month.

The Halifax pays an excellent rate but is restricted to only saving the same amount each month for a year at a time. It can be rolled over after 1 year, but then you are only recylcing the same money thereafter.

The Scarborough's is a 'clean' (as they say) regular saver account in that you :

• Only need to save a minimal amount regularly (£10) and can even miss two of these payments - in error say - in a 12 month period
• Can add (as and when) further amounts up to a respectable monthly limit (£250)
• Can make at least one withdrawal in a 12 month period without penalty

This gives you a great deal of flexibility which a 12 month regular saver cannot.

Finally, interest. Although 12 month regular savers pay upto 10%, they do so only on the average balance for that limited period (something which seems to catch a lot people out who see the headline rate and expect to get that on all they put in. They can't). However whilst this is true of a 'clean' regular saver in each year, the culmulative effect - of being able to have all of last year's money earn interest for the full 12 months in the next - means that you 'nearly' get the headline rate in the 2nd, 3rd and 4th years etc.

Example:

£100 into a 10% saver for 12 months: average balance approx £600 - 50% of amount paid in - £60 gross interest - £48 if a basic taxpayer.

£100 into a 6% saver for 12 months: average balance £600 ('50%')
£100 into a 6% saver for a further 12 months: average balance £1800 ('75%)
£100 into a 6% saver for a further 12 months: average balance £3000 ('83%')
£100 into a 6% saver for a further 12 months: average balance £4200 ('88%')

It never gets to '100%' of the money paid in but the longer you go the nearer to the headline you actually get.

Thus the type of account you might choose can depend on many things - your circumstances and savings habits - but 12 monthly savers do have limitations also.

grumbler

Milarky wrote:

...The Halifax ... is restricted to only saving the same amount each month ....

This is incorrect. You can change the amount every month within £25-£250.

Although 12 month regular savers pay upto 10%, they do so only on the average balance for that limited period (something which seems to catch a lot people out who see the headline rate and expect to get that on all they put in. They can't).

This comment is absolutely irrelevant to those who don't have a lump sume to save at the start (the OP doesn't). However, I agree that long-term 6% RS cold be better than a sequence of short-term 10% RS