A&L 5.38% Direct Saver

MarkyMarkD

humanbeing wrote:

Just to add a little balance here my account was opened in about a fortnight and is running smoothly. If the rate doesnt increase i probably wont use it much though.

Moneyfacts states today that the rate will increase to 5.50% (5.64% AER) on 2 December 2006, an increase of 0.26% in the AER.

MoneyBee_3

I have two Premier Direct accounts and a Direct Saver Account for myself and my wife has a Premier Direct account as well. Easily set up and operating OK. Thanks for the easy £50 a time for the Premier Direct accounts.

Steve_xx

It seems to me that this account is a bit of a con in that you are virtually prevented ever from withdrawing your money without compromising on some portion of the interest

A&L's terms and conditions state:

No interest is earned on the account balance during the calendar months in which a withdrawal is made or the account is closed.

Therefore, as I read it, if I have 100k in the account and I withdraw 50k from it on 1st Jan, then I will receive no interest at all on the 100k for the month of January. The case wuld be similar if I made the 50k withdrawal on say the 29th Jan?

I know that some on this thread have indicated that it would be possible to withdraw all of the funds from the account at the start of the month, thereby avoiding loss of interest. But would it not be the case that those doing so would then be indebted to A&L for the amount of interest for that month that should have been forfeited to them?

Or have I missed something here?

MarkyMarkD

We've been here before, Steve. You have missed something.

If you withdraw all the funds on the first day of the month, your interest for that month would be zero. And therefore zero is the amount of interest you forfeit.

If you leave the money in overnight for the 1st and withdraw it all on the 2nd, the interest you would have earned for the month is 1/365 x 5.50% or around 0.015%. And that's how much you would forfeit.

If you withdraw it all on the 3rd, you would have earned (and therefore forfeit) 2/365 x 5.50% = around 0.030%. And so on for any withdrawals on later days in the month.

The most you can forfeit in respect of one or more withdrawals in any one month is 30/365 x 5.50% = around 0.45%. Which is why the account is not all bad - if you have the account and are forced to withdraw money on the 31st day of a month (absolutely the worst thing) the rate only goes down from 5.64% AER to around 5.2% - still a good rate.

And as I've said previously on MSE, you shouldn't be putting money into this sort of account unless you are really confident you won't need it - any money you might need urgently should be in a pure "instant access" account.

Bisoy

My A&L Direct Saver and ICESAVE has been very nicely set-up. The bulk of my savings is in A&L Direct Saver.

If I want to withdraw larger amounts I'll take it out on the first leaving just £1 then move the rest to ICESAVE which I'll receive interest middle of the month then if I have another extra cash that I won't touch for a couple of months then I move it back to A&L Direct saver at the end of the month.

Steve_xx

Bisoy wrote:

My A&L Direct Saver and ICESAVE has been very nicely set-up. The bulk of my savings is in A&L Direct Saver.

If I want to withdraw larger amounts I'll take it out on the first leaving just £1 then move the rest to ICESAVE which I'll receive interest middle of the month then if I have another extra cash that I won't touch for a couple of months then I move it back to A&L Direct saver at the end of the month.

I note that you have to retain a minimum balance of 5k. Therefore you would have to leave that amount in the account for the remainder of the month you made a withdrawal in, and it would not earn any interest.

Bisoy

Hi Steve,

The minimum balance you will earn interest is £5000 and the minimum balance you can keep the account open is £1.

That's exactly the point of leaving just £1. If you made any withdrawal anytime during the calendar month then you'll money will not earn any interest whether it's £5000 or £1.

So if you plan of withdrawing money from your Direct saver take the whole lot leaving just £1 and move it to an alternative top paying savings account e.g. ICESAVE so that you'll still earning interest daily except for the few days your money is in transit.