NatWest regular savings account rip off

hornetsnest_2

MSE Official Insert:

For the best regular savings accounts read our Regular Savings Accounts guide.

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Last July I was offered a new savings account at my branch of Natwest. If I saved between £25-£300 per month for 12 months and not draw from it then I would receive 5% gross interest. I did this and when it matured in August I received £50 interest...is this right?

rb10

The interest that you get depends on the amount that you paid in each month.

For £50 interest, it looks as though you paid in around £200 per month.

See a calculator here: http://www.moneysavingexpert.com/savings/savings-accounts-best-interest?dd#calc that can work out how much interest you should have received.

Remember that the final balance at the end of the year is just that: a final balance. For most of the year, you were earning interest on a much lower balance than this. Interest is calculated daily, on the balance on that particular day.

hornetsnest_2

Thank you for the reply...very helpful

bendix

Another 'rip-off' which isn't a rip-off at all but is deemed a rip-off because the saver has - at best - a tenuous grip on the concept of interest payments.

ERICS_MUM

I'm disappointed that you assumed this was a Nat West rip-off before you even understood how interest was calculated and checked that the amount you received was actually correct.

Turning to the amount you received, if you have to pay tax on your interest this will have been deducted from the gross interest.

rb10

ERICS_MUM wrote: »

I'm disappointed that you assumed this was a Nat West rip-off before you even understood how interest was calculated and checked that the amount you received was actually correct.

It is a shame how most people will initially think that the bank is 'out to get them' and 'ripping them off' when in most cases complaints like this come down to either:

- the customer not understanding how interest payments work; or
- the customer not having read the T&Cs of the account.

Loughton_Monkey

hornetsnest wrote: »

Last July I was offered a new savings account at my branch of Natwest. If I saved between £25-£300 per month for 12 months and not draw from it then I would receive 5% gross interest. I did this and when it matured in August I received £50 interest...is this right?

First Direct offers the same deal. My wife and I both had one of these 'mature' this month, both at the maximum £300 per month - payments purely under control of FD by Direct Debit.

In my case, I received £78.05. My wife received £77.96. After deduction of 20% tax.

I assume the very small difference is some quirk of what day of each month the DD worked (our start dates were slightly different).

So just do a pro-rate calculation using the amount you paid in, and hopefully it will add up.

MarkFromCornwall

hornetsnest wrote: »

Last July I was offered a new savings account at my branch of Natwest. If I saved between £25-£300 per month for 12 months and not draw from it then I would receive 5% gross interest. I did this and when it matured in August I received £50 interest...is this right?

Rough estimate - say you paid in £200 per month.
At the start of the year you had £200 in the account and at the end of the year you had £2400 in the account so on average you had about £1300 in the account. 10% of that is £130 so 5% is £65. If you deduct income tax at 20% that leaves about £52.

FWIW, I had one of these accounts that matured about a month ago and I consider it a good deal.

I hope that helps.

YorkshireBoy

hornetsnest wrote: »

...snip...

Even if you'd put it in an account paying 2.5%, and recieved £25, it still wouldn't have been a rip off.

You should be pleased NatWest offered you that particular account.

For future reference, and for regular (same day/same amount) deposits, you can calculate your interest (net after basic rate tax) as:

(12 x monthly deposit) x gross p.a. interest rate / 12 x 6.5 x 0.8

So, and to back up Mark's post above, £200 per month would return:

£2,400 x 5% / 12 x 6.5 x 0.8 = £52

Milarky

bendix wrote: »

Another 'rip-off' which isn't a rip-off at all but is deemed a rip-off because the saver has - at best - a tenuous grip on the concept of interest payments.

Yes, another example of 'blame culture' at its worst. But who is really to blame for blame - the old man in the sky?