Vantage - How long before use (online app)

isayhello

blueberrypie wrote: »

The point of having more than one Vantage account is if you have more than £7k in savings. If you only have £5k, there's no benefit to having more than one. But if, for example, you have £12k saved, you'd only get the 4% on the first £7k in one account - but by splitting it between two accounts, you can get 4% on the whole amount.

Hi,

Thanks, i understand what you're saying but wouldnt you earn more interest if you put say 20k into an account as a lump sum earning about 3-4% than earning interest on 3 separate smaller amounts?

rb10

isayhello wrote: »

Hi,

Thanks, i understand what you're saying but wouldnt you earn more interest if you put say 20k into an account as a lump sum earning about 3-4% than earning interest on 3 separate smaller amounts?

Say you had £14k to put into savings, and the savings account was paying 4%.

If you put it all into one account, at the end of the year, you'd have:

14000*0.04 = £560

If you split it between two accounts (both paying 4%), then at the end of the year, you'd have:

1st account: 7000*0.04 = £280
2nd account: 7000*0.04 = £280
Total: 280 + 280 = £560

So the interest you get is the same whether you split it into smaller lumps, or leave it all in one big chunk. This is because it's a percentage, or a proportion, of the money that you have.

Rosso

But you earn the 'standard interest rate' on anything over £7000

Current Accounts with Vantage

Balance Interest Paid MonthlyAER %Gross %Net %
£1+ 0.10 0.10 0.08
£1,000+ 2.00 1.98 1.59
£3,000+ 3.00 2.96 2.37
£5,000 up to £7,000 4.00 3.93 3.14
These interest rates are correct as at 02/02/2009.

To get these higher rates of interest paid each month, all you need to do is:

• stay in credit during the month, and
• pay in at least £1,000, for example your salary, each month.

The first £7,000 of your balance will earn the interest rate in the table above. Any balance over £7,000 will receive the standard interest rate for your type of account.

blueberrypie

isayhello wrote: »

Hi,

Thanks, i understand what you're saying but wouldnt you earn more interest if you put say 20k into an account as a lump sum earning about 3-4% than earning interest on 3 separate smaller amounts?

No.

A percentage is just a particular kind of fraction. Half of 100 is 50. Now split the 100 into two - you have 2 x 50. Half of the first 50 is 25. Half of the second 50 is 25. Add the two 25s together and you get 50 - exactly the same as half of the 100.

4% of £10k = £400.
4% of £5k = £200
4% of a second £5k = £200

Add the two £200s together and you have £400 - exactly the same as if you'd had the full amount in one place.