First Direct Regular Saver 8%

apt

First Direct have increased the rate on their one year regular savers to a tasty 8%. Current account holders only. Max £300 per month.

http://www2.firstdirect.com/1/2/savings/regular-saver-account;jsessionid=0000N0HUwT3dPv_15JGdqzG6Q1d:11qkqgmtb

Wobblydeb

Darn it, my existing (5%) regular saver has until February to run. :undecided

Is it just my imagination or are saving rates showing a hint of getting competitive again?

premierfella

I'm 2 months into my latest one.

I don't think the terms and conditions prevent the closure of the existing one and opening of a new 8% Regular Saver - the 3% difference probably more than compensates me for taking the 2 months negligible interest hit on my existing account.

Rob_192

Very tasty! Unfortunately my wife and I are already 3 and 5 months respectively into our existing 5% ones. I wonder if you can do joint one?

It's been a few years now since reg saver accounts were this high.

SnowMan

premierfella wrote: »

I'm 2 months into my latest one.

I don't think the terms and conditions prevent the closure of the existing one and opening of a new 8% Regular Saver - the 3% difference probably more than compensates me for taking the 2 months negligible interest hit on my existing account.

It is possible, I have just directly checked with them by phone.

I opened a 5% regular saver on 18th October. I have just closed the account via phone. It goes into a queue to get closed which should be actioned tomorrow and then takes 48 hours to be processed.

So if you close it today should be possible to open a new 8% one by Thursday or Friday ish. You have to go through the application process again of course.

(Update 7 Nov: 8% account up, funded and showing on internet banking on Saturday)

Of course you only get a nominal rate for the old account on closure.

At 8% and the maximum £300 pm for a basic rate taxpayer gives about £124 in net interest over 12 months and at 5% net interest is about £78, so a difference of about £46. You then have to subtract the lost interest on closing the account (they only pay a nominal rate on closure) to work out the potential gain.

Assuming you are 2 months in and have paid the maximum of £300 net; interest accrued to date at 5% and effectively lost on closure works out at about £3. Subtracting this and ignoring the nominal interest on closure gives you a gain of about £43 (=124 - 78 - 3) by opening a new one. So well worth it if you are funding to the £300pm maximum.

The cut off point for maximum funding as to when closing is beneficial works out at about month 9. So even closing it half way through might make sense where gain is about £25 (=124 - 78 - 21). However if the 8% is still available in 6 months time (but not in 12 months time) then closing after 6 months would probably be a mistake as you miss out on the chance to get 8% in 6 months time when the 5% matures. Also increasing interest rates in a years time might make the £25 gain a bit misleading (as 8% in 12 months may not be as good as 8% now i.e. the differential over what you can get elsewhere diminishes), so think it through if closing at 6 months.

Baldur

Rob_192 wrote: »

Very tasty! Unfortunately my wife and I are already 3 and 5 months respectively into our existing 5% ones. I wonder if you can do joint one?

See http://www2.firstdirect.com/1/2/savings/regular-saver-account;jsessionid=0000N0HUwT3dPv_15JGdqzG6Q1d:11qkqgmtb

Sole account holders only. Only one account per person.

Rob_192

Baldur wrote: »

See http://www2.firstdirect.com/1/2/savings/regular-saver-account;jsessionid=0000N0HUwT3dPv_15JGdqzG6Q1d:11qkqgmtb

Thanks Baldur, I was going to check that out at lunchtine!

Suzanne_Louise

Fabulous - my current 5% one pays up later this month, so I can take out my new one on the same day!!!!!!

johnmoney05

Just closed my 2 months old account! I serious hope they don't drop the rate after 48 hours!!

Empty_pockets

New to savings...and 40% tax. I think you're in 40% at £43876??

I'll gross about 45-47K this year.

Currently got a HSBC cash ISA with about £1200 in it.

I have just opened a first direct account with the intent of eventually transferring my current account to them.

Is it worth moving my savings to them too. I guess I'd lose 40% of that 8%???

Confused.

p.s I would save the maximum of £300pm in the first.

SnowMan

Empty_pockets wrote: »

New to savings...and 40% tax. I think you're in 40% at £43876??

I'll gross about 45-47K this year.

Currently got a HSBC cash ISA with about £1200 in it.

I have just opened a first direct account with the intent of eventually transferring my current account to them.

Is it worth moving my savings to them too. I guess I'd lose 40% of that 8%???

Confused.

p.s I would save the maximum of £300pm in the first.

If you qualify for the account then over the 12 months a basic rate tax payer funding to the £300pm max would get about £124 in interest after tax and a 40% tax payer would get about £93 after tax.

At the simplest level if you assume you could only get half the First Direct rate in an alternative savings account then then there is a £46 (0.5 x 93) benefit to opening this account.