Lloyds TSB 5% Monthly Saver

psychic_teabag

See http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#dripfeed for the benefits of drip-feeding from a normal savings account to a regular saver. But there is an extra complication from the fact that balance in the vantage needs to be kept above 5k - letting it fall below is probably overall worse since you lose your 4% on the entire remaining balance.

Maybe cap how much you move so that you can keep 5k in vantage. Actually, the reg saver allows withdrawls, so you could possibly move money back from reg saver to the vantage to keep the balance up. Or start with the max monthly transfer, and reduce it to the minimum after a few months to keep the high interest on what you've already paid in.

dazeruk

hethmar wrote: »

Ive tried to find this answer - please bear with me if its been covered. I can see 5% is a good rate of interest but its only on the amount you put in which is capped at £250 a month, so you only get 5% on the max amount £250 x12 for one month? Is that correct? So surely it is better to have another vantage account at 4% all year rather than open this savings account? Sorry, thicko with sums.

The easiest way to think of it is

Where would my £250 be earning the most interest? In the 4% Vantage account or in the 5% monthly saver?

So each month you are moving £250 from an account earning 4% to one earning 5%.

Over the year that difference of 1% will bag you £15 more interest.

It would be nice to deposit the full amount of 12 x £250 into the account at the start, but you have to drip feed. If you could deposit the full £3,000 immediately then you would have got about £30 more interest.

adindas

The best solution is the take both advantages.
Open 3 Vantage a/c (the maximum you could get under sole name) and maintain baance of £5000-7000

Drip Feed (do stading oreder) from your vantage A/C to your Monthly saver to get 5%. By doing this you will get the best option?

ADINDAS

hethmar wrote: »

Ive tried to find this answer - please bear with me if its been covered. I can see 5% is a good rate of interest but its only on the amount you put in which is capped at £250 a month, so you only get 5% on the max amount £250 x12 for one month? Is that correct? So surely it is better to have another vantage account at 4% all year rather than open this savings account? Sorry, thicko with sums.

Nine_Lives

I'm clearly having a dense moment as i can't see why you should open towards the end of the month.

This is my way of seeing it:

It runs 12 months. So if you open it on 1st Nov 2010, then it "expires" (note "") on either 31st Oct 2011 or 1st Nov 2011 (whichever, and you only get 12 payments).

People saying if you open towards the end of the month, you'll get 13 payments. But wouldn't you get 13 payments if you opened in the middle of the month too?

Such as, you open on 16th Nov 2010 & deposit £250. The account is then set up & you go online to change the SO date to the 1st of the month (so your next deposit now becomes 1st Dec 2010).

You'll have opened the account on 16th Nov 2010, so the "expiry" date of the account will be 15th Nov 2011 (which will be after the final deposit date of 1st Nov 2011 (as you'll have altered the SO date to be the 1st of the month).

This will then also get you 13 payments - yet your account will have been opened in the middle & not the end of the month as many are saying.






There clearly must be a flaw in what i've just mentioned above as everyone is saying open at the end of the month - but i can't see the flaw, which is why i'm asking you guys to point it out to me.





Aside from this, i have 2x Lloyds TSB Vantage accounts, so i'm eligible for this account.
Wouldn't the first direct account at 8% be better though? http://www2.firstdirect.com/1/2/savings/regular-saver-account;jsessionid=0000N0HUwT3dPv_15JGdqzG6Q1d:11qkqgmtb Isn't it essentially the same, except your cap is £300?? The only problem (for me) there is that i don't have a first direct current account. I'm assuming you don't need to have held one for x-amount of time & that the FD accounts are quick & easy to open up?

dazeruk

K_P83 wrote: »

I'm clearly having a dense moment as i can't see why you should open towards the end of the month.

This is my way of seeing it:

It runs 12 months. So if you open it on 1st Nov 2010, then it "expires" (note "") on either 31st Oct 2011 or 1st Nov 2011 (whichever, and you only get 12 payments).

People saying if you open towards the end of the month, you'll get 13 payments. But wouldn't you get 13 payments if you opened in the middle of the month too?

Such as, you open on 16th Nov 2010 & deposit £250. The account is then set up & you go online to change the SO date to the 1st of the month (so your next deposit now becomes 1st Dec 2010).

You'll have opened the account on 16th Nov 2010, so the "expiry" date of the account will be 15th Nov 2011 (which will be after the final deposit date of 1st Nov 2011 (as you'll have altered the SO date to be the 1st of the month).

This will then also get you 13 payments - yet your account will have been opened in the middle & not the end of the month as many are saying.

There clearly must be a flaw in what i've just mentioned above as everyone is saying open at the end of the month - but i can't see the flaw, which is why i'm asking you guys to point it out to me.

It's to get two payments into the account very close together at the start.

Say you open the account 31/10/2010 and get the first payment in. Change SO to 1/11. You now have £500 in the account right from the very start. The account matures on 30/10/2011 and the £500 has got a years interest on it. If you open 16/10, make the first payment and then change to 1/11, the second payment will earn a year minus 15 days interest on it.

You can still get 13 payments into the account in both scenarios, but the first will earn you more interest.

Biggles

K_P83 wrote: »

There clearly must be a flaw in what i've just mentioned above as everyone is saying open at the end of the month - but i can't see the flaw, which is why i'm asking you guys to point it out to me.

There isn't a flaw. I think people are mainly saying that if you open the account towards the end of a month, make sure you change the SO to the 1st of the next month.

There's no good reason to delay and leave your money in a lower (or no-) paying account while you could be putting money into a monthly saver at 5%. Whatever happens, the 2nd to 13th payments will still go in on the same date, the 1st of the month.

More importantly, the account will be withdrawn at some point (like its predecessor was), and you wouldn't want to be waiting for the right moment, only to find it was no longer available.

Nine_Lives

Well that's what i'm thinking. Taking my example of 16th of the month, that just leaves 14 more days until the end of this month. I'm sure i can stand 14 days worth of interest. I just wondered if there was a reason for having the opening smack at the end of the month that i didn't quite "get".

I didn't want to wait on the end of this month, only for the account offering to be withdrawn.



My only thought now, is should i play easy & go for LTSB (as i'm already a current account owner), or should i open ANOTHER account with First Direct & do £300/month to their 8% offering.

exel1966

There are numerous posts above explaining why you should follow the open late in month and add the second and future payments as early as possible in the following and subsequent months. It's amounts to far more than just 14 days worth of interest.
This principle will apply to most monthly/regualr savings accounts, hence why I posted it at the start of this thread.

adindas

It also depends from the origin of the money to be used to pay the RSA.

If it just comes from Current A/C which pay rubbish interest then people will be better off to put it into RSA as soon as possible rather then waiting until the end of the month.

But when it comes from high interest rates such as from Vantage A/C then it is worthy to wait until close to the end of the month.

ADINDAS

dazeruk wrote: »

It's to get two payments into the account very close together at the start.

Say you open the account 31/10/2010 and get the first payment in. Change SO to 1/11. You now have £500 in the account right from the very start. The account matures on 30/10/2011 and the £500 has got a years interest on it. If you open 16/10, make the first payment and then change to 1/11, the second payment will earn a year minus 15 days interest on it.

You can still get 13 payments into the account in both scenarios, but the first will earn you more interest.

Nine_Lives

exel1966 wrote: »

There are numerous posts above explaining why you should follow the open late in month and add the second and future payments as early as possible in the following and subsequent months. It's amounts to far more than just 14 days worth of interest.
This principle will apply to most monthly/regualr savings accounts, hence why I posted it at the start of this thread.

I know it had been mentioned, but i didn't get it. Apologies if that makes me slow or whatever, but the reason i asked is because i didn't get it with what had been mentioned so far.

I still can't see how making an opening deposit mid-month is going to make a big loss compared to at the end of the month. I'm not saying that the difference is not going to be a fair one, i'm simply saying i can't see/understand/grasp how 14 or so days is going to make a worthwhile difference.