Skipton Building Society Questions and Answers

ultrawomble

Skipton_Building_Society_Representative wrote: »

To make the most out of our regular saver account, open it on the first day of the month as interest is calculated daily and credited monthly.

Really? Surely it is better to make the first payment on the last day of the month (say 30th November) and the second (and subsequent payments) on the 1st of the following months to maximise the interest gained i.e. the 1st payment is earning interest for 365 days, and the second payment is earning interest for 364 days.

Also, the T&Cs of your Regular Saver state that:

Interest will accrue on a daily basis and will be capitalised at midnight, on the 12 month anniversary of your account opening.

http://www.skipton.co.uk/savings_and_investments/savings_accounts/regular_saver/disclaimer.aspx

lkmc01

I also through that it was best to open at the end of the month and then continue to make 11 more payments at the beginning of following months?

I was checking.

Can the rep please explain why it is best to open the account at the start of the month?

Thanks

adindas

Please correct me if I am wrong.
In my Opnion this is not always the case as it depends on the origin of the money to pay for RSA.

If the money come from the current a/c which pay rubbish interest rate then I think it is better to put it to the high interest RSA as soon as you can as the interest of 5% PA start on that day. Otherwise your money will stay in the a/c which earn almost no intetrest at all..

So I think the theory to put it at the end of the month and later the 1st day on following month should be bettter explained. Otherwise people might end up loosing potential interest by waiting until the end of the month.

But I probably miss something, other people who advocate this theory could probably explain it further.

ADINDAS

ultrawomble wrote: »

Really? Surely it is better to make the first payment on the last day of the month (say 30th November) and the second (and subsequent payments) on the 1st of the following months to maximise the interest gained i.e. the 1st payment is earning interest for 365 days, and the second payment is earning interest for 364 days.

Also, the T&Cs of your Regular Saver state that:



http://www.skipton.co.uk/savings_and_investments/savings_accounts/regular_saver/disclaimer.aspx

Skipton_Building_Society_Representative

yelf wrote: »

Thats all well and good, but please caa you confirm WHY you use these tests and WHY failing them means you scrap a "guarantee" - and would an increase in base rate mean an increase in your SVR?

Hi yelf,

The reasons for the decision are available on the link I included in my response (www.skipton.co.uk/svr) and include a page of questions and answers you may find useful. There is also a message from David Cutter, our Group Chief Executive, on that page explaining the Society’s position.

Thanks,

Caroline

lkmc01

All I know is its best to have as much as possible in a higher rate account for as long as possible, so move your cash through to a higher rate account as soon as they let you.

You need to bear in bear that there can be complications with:-
what actually classes as a month

• when the account opens and closes
• what dates you can pay money through
• making sure your bank doesn't pay standing orders early due to bank hols etc
• if you want different lumps of cash to be available at the same time some planning may be involved

I get muddled up when it comes to 13 monthly payments.

Also with this reg saver am I right in thinking that the maximum in the account is 6000 paid in over 12 months? can it be 6000 paid in over 13 months? ie over at the end of this month, pay through from dec to oct next year and then get another payment in at start of nov. I know its better to get the 500 in each and every month but if I didn't make it one month can I then add the rest in to make it to 6000 at start of nov next yr?

ultrawomble

adindas wrote: »

Please correct me if I am wrong.
In my Opnion this is not always the case as it depends on the origin of the money to pay for RSA.

If the money come from the current a/c which pay rubbish interest rate then I think it is better to put it to the high interest RSA as soon as you can as the interest of 5% PA start on that day. Otherwise your money will stay in the a/c which earn almost no intetrest at all..

So I think the theory to put it at the end of the month and later the 1st day on following month should be bettter explained. Otherwise people might end up loosing potential interest by waiting until the end of the month.

But I probably miss something, other people who advocate this theory could probably explain it further.

ADINDAS

OK, let's assume that the rate stays at 5% for the year and I pay no tax on the interest so I receive it gross.

Option 1
If I open the account on the 1st December 2010 with £500 and make 11 further payments on the 1st of each month (total saved = £6000), and the account matures on the 1st Dec 2011 I'll receive about £161 gross interest (~£129 after 20% tax).

Option 2
If I open the account one day earlier on the 30th November 2010 with £500 and make 11 further payments on the 1st of each month (total saved = £6000), and the account matures on the 30th Nov 2011 I'll receive about £184 gross interest (~£147 after 20% tax).

So, I'm £23 better off with Option 2 than with Option 1

Here's how it works:

Basically, you only get interest on each £500 payment for the time it is in the account.

With Option 1, I have the 1st £500 earning interest for 12 months; the 2nd £500 earning interest for 11 months; the 3rd £500 earning interest for 10 months etc.

With Option 2, I have the 1st £500 earning interest for 12 months; the 2nd £500 earning interest for 12 months, less 1 day; the 3rd £500 earning interest for 10 months etc.

As you can see from above, the 2nd payment in Option 1 only earns interest for 11 months, whereas in Option 2 it earns interest for effectively 12 months.

lkmc01

ultrawomble wrote: »

OK, let's assume that the rate stays at 5% for the year and I pay no tax on the interest so I receive it gross.

Option 1
If I open the account on the 1st December 2010 with £500 and make 11 further payments on the 1st of each month (total saved = £3000), and the account matures on the 1st Dec 2011 I'll receive about £161 gross interest (~£129 after 20% tax).

Option 2
If I open the account one day earlier on the 30th November 2010 with £500 and make 11 further payments on the 1st of each month (total saved = £3000), and the account matures on the 30th Nov 2011 I'll receive about £184 gross interest (~£147 after 20% tax).

So, I'm £23 better off with Option 2 than with Option 1

Here's how it works:

Basically, you only get interest on each £500 payment for the time it is in the account.

With Option 1, I have the 1st £500 earning interest for 12 months; the 2nd £500 earning interest for 11 months; the 3rd £500 earning interest for 10 months etc.

With Option 2, I have the 1st £500 earning interest for 12 months; the 2nd £500 earning interest for 12 months, less 1 day; the 3rd £500 earning interest for 10 months etc.

As you can see from above, the 2nd payment in Option 1 only earns interest for 11 months, whereas in Option 2 it earns interest for effectively 12 months.

:beer: beautifully explained :beer:

slush

Hi Caroline,

Thanks for coming on here and answering all our questions.

The new RS looks very tempting. However, I see that the great interest rate of 5% is variable.

So when Skipton has reached its target with account, the customer is at risk of the bottom falling out of the rate and whilst still being tied in to 12 months saver.

Have I mised an important point something? If so, I'll get my paperwork filled in and away in the post.

Or could this Skipton RS be another "suck 'em in, then slap 'em down" deal? Maybe I seem cynical, but why else would the account be variable? Otherwise it would be a fixed rate and that particular "issue" of the RS closed when rates needed to change.

Hopefully you'll show me the solution to my concerns.

Regards, Slush

johnmoney05

slush wrote: »

Hi Caroline,

Thanks for coming on here and answering all our questions.

The new RS looks very tempting. However, I see that the great interest rate of 5% is variable.

So when Skipton has reached its target with account, the customer is at risk of the bottom falling out of the rate and whilst still being tied in to 12 months saver.

Have I mised an important point something? If so, I'll get my paperwork filled in and away in the post.

Or could this Skipton RS be another "suck 'em in, then slap 'em down" deal? Maybe I seem cynical, but why else would the account be variable? Otherwise it would be a fixed rate and that particular "issue" of the RS closed when rates needed to change.

Hopefully you'll show me the solution to my concerns.

Regards, Slush

I don't think anyone can answer this. Take it or leave it, or if you can find a better deal, you are welcome to it.

johnmoney05

adindas wrote: »

Thank you for this. It is clearly mentioned but we could pay in cash.
It could the one that I am visiting is an agent or probably they just want me to pay in cheques it is they will benefit from this. eg. they could delay until the first date of the month

ADINDAS

Yes, you are correct. The staff is trying to get your £1 interest to benefit their bonus. :rotfl: