Skipton Building Society Questions and Answers

SnowMan

Hi Caroline

I was told in branch today while opening the account with £500 that my next £500 contribution could be on any day between 1st December and 31st December.

Some people are opening this 5% account because they have money sitting in instant access accounts which is paying around 3% max at the moment which they will feed into the regular saver, and getting 5% is better than 3%.

Consequently the sooner you get the money into the regular saver (by moving from the instant access account) the sooner you are getting 5% rather than 3%. So if opening an account today by then putting money in subsequent months on the 1st rather than the 25th you get the benefit of 5% rather than 3% for an extra 24 days in relation to each subsequent contribution.

I think that is all ultrawomble is saying.

Personally having opened an account today I am paying in subsequently on 3rd as that ties in with some other payments going out and is convenient for me. Others in work funding out of salary may pay into the regular saver shortly after their salary is paid.

However for those feeding in as mentioned earlier and trying to tweek the benefit to the maximum paying in on 1st is the most beneficial choice.

However I am with Rollinghome that you can’t be expected to answer questions on how to tweek the maximum benefit out of this account.

But it might be worth you reconfirming that anyone opening and £500 funding an account this calendar month (e.g. today) can pay their next contribution on any day from 1st to 31st December to meet the account terms and conditions (obviously the account is restricted to a maximum of 12 contributions of £500 so care is needed at the end)

Hope that helps

SnowMan

calypso_rhapsody

Skipton_Building_Society_Representative wrote: »

We are currently looking into offering a BACS facility for maturing funds next year to make this process easier for customers.

Thanks for your prompt reply Caroline - a BACS transfer would be most helpful and i think fairer to your savers. As it is, you will send me a cheque on the maturity date - it should arrive the next day about noon. I probably can't get to the bank for a day or two (it's a 12 mile drive) then it takes 3 working days to clear - but almost certainly there's a weekend so that's 5 days. In the end i lose over a week's interest. Plus there's the risk that the cheque went astray in the post in the first place ....

As both my husband and i have accounts maturing next week, we would have to pay £50 to get the money electronically ... though i did point out to the chap on the 'help desk' that if we transferred the money into one account before transferring the funds then it would be only £25. He agreed - but had not offered it as a suggestion himself. So the letter to instruct you to do this is winging its way to you.

Out of interest, why are you 'looking into offering BACS' and why does it take time to introduce - surely it should be a no-brainer and could be implemented almost immediately (though maybe not in time for my maturity next week!)?

ultrawomble

Skipton_Building_Society_Representative wrote: »

Hi ultrawomble,

If I open an account today (25 November 2010), the interest will only be credited to my account on 24 November 2011. By paying in the full subscription on the monthly anniversary of the account opening, I am allowing the maximum amount of money to be in my account for the longest time possible, giving me the most interest possible (because interest is calculated daily).

So, the 'month' runs from the monthly anniversary of the account opening, to the day before the next monthly anniversary. So I will only ever have the account for 12 months (there's no way to have it for 13 'months').

I hope this helps,

Caroline

That is factually incorrect!

The maximum interest will be gained by paying in the 2nd-12th installments on the 1st day of the month:

See this post as to why!!
http://forums.moneysavingexpert.com/showpost.php?p=38784898&postcount=64

ultrawomble

Rollinghome wrote: »

Let's be fair. We can expect Caroline to advise on the terms, conditions etc. of Skipton products and how they're intended to be used.

Why not? If you're representing a company you should at least know the T&Cs of the products that you offer.

Rollinghome

ultrawomble wrote: »

That is factually incorrect!

The maximum interest will be gained by paying in the 2nd-12th installments on the 1st day of the month:

See this post as to why!!
http://forums.moneysavingexpert.com/showpost.php?p=38784898&postcount=64

ultrawomble wrote: »

So, if I chose Option 3 I'm £8 better off than with Option 1, but if I chose Option 2 I'm £23 better off than with Option 1.

For clarity it should be pointed out, as Adindas has already done, that your calculations appear to assume that the £500 transfered in on the 1st is currently receiving 0% interest. You have also assumed no tax is paid.

If the £500 is currently in an account that is already paying interest, then the amount of interest lost by making the transfer early could cancel out some or all of the interest gained - interest which for most people will also be subject to tax.

Without knowing whether the money is coming from another account and, if so, the rate of interest being paid, it's not possible to know for certain whether there would be any gain or what that gain would be.

I'd suggest that's really something for the individual to work out for themselves rather than Skipton. They have no idea of the rate of interest paid by the account the funds are transfered from. All they can do is confirm whether the T&Cs allow you to do what you intend.

ultrawomble

Rollinghome wrote: »

For clarity it should be pointed out, as Adindas has already done, that your calculations appear to assume that the £500 transfered in on the 1st is currently receiving 0% interest and you have also assumed no tax is paid.

I know, and if you read both posts you'll see that Option 3 that I modeled is based upon the scenario imagined by Adindas.

Rollinghome wrote: »

If the £500 is currently in an account that is already paying a reasonable rate of interest, then the amount of interest lost by making the transfer early will cancel out some or most of the interest gained - interest which for most people will also be subject to tax.

Quite possibly.

Without knowing whether the money is coming from another account and, if so, the rate of interest being paid, it's not possible to know for certain whether there would be any gain or what that gain would be.

No arguments with that, but the maximum interest on the regular saver will always be gained by having the 1st and 2nd payments on consecutive days.

Rollinghome wrote: »

I'd suggest that's really something for the individual to work out for themselves rather than Skipton. All they can do is confirm whether the T&Cs allow you to do what you intend - as they appear to do.

No, read the following post:

http://forums.moneysavingexpert.com/showpost.php?p=38761080&postcount=40

Skipton were asked the best time of the month to open the saver. Clearly the 1st day of the month is not the best.

adindas

ultrawomble wrote: »

Option 3
If I open the account on the 10th November 2010 with £500 and make 11 further payments on the 1st of each month (total saved = £6000), and the account matures on the 10th Nov 2011 I'll receive about £169 gross interest (~£135 after 20% tax).

So, if I chose Option 3 I'm £8 better off than with Option 1, but if I chose Option 2 I'm £23 better off than with Option 1.

You have not included my suggestion, switch SO in the following month e.g. December which is previsously November 10 to 1 December, in the following month. You will be better off. So your £500.00 installment every month will start earning interest on day 1 of the month because you move the day forward to the 1st day of the month.

Also include the opportunity cost (e.g. potential) that you have forgone because you are waiting until the end day of the month, while for this you earn no interest at all becasue they are in the a/c with 0% interest. Work on the same time frame until November 30 -2011 (not November 10, like you show in your calculation).

- In option 2 & Option 3 you are looking into a different time frame. Option 2 is until 30 November 2011. Option 3 is up to November 10, 2011. Your calculation should be looking into the same time frame e.g. November 30, 2011.

- With Option 3 your money is untie on November 10th 2011. From November 10 - November 30 (20 days) this money could still earn some interest if I put it immediately into another RSA or high interest saving account (say 5%). If you take this into account 20 days of £6000+Interest with 5% are you still saying it is better ?

- The theory of 1 &30 will work well if you have opportunity to put 13 installment. But this a/c only allow you to put £6,000 (e.g. 12x). They already aware about this.

So people who follow this theory without considering their circumstance might be worse off by waiting until the last day of the month.

Another materr e.g. practicality. Your ! year RSA start in the day you are opening, not the day when you put your money. If you wait until the last day of the month it could be holiday, falling sick you do not have time, etc.


ADINDAS

Rollinghome

ultrawomble wrote: »

No arguments with that, but the maximum interest on the regular saver will always be gained by having the 1st and 2nd payments on consecutive days.

No, I don't think so.

Payments can only be made on consecutive days if the account is opened on the last day of the month and the next payment made on the 1st of the following month. If the money is currently in an account paying 0% interest, as you assumed, then delaying opening of the account until the end of the month will result in less interest, not more. If interest is being paid then the differential while delaying opening the account would have to be factored in.

I haven't trawled through your examples in detail but can't see any reference to the rate of interest being paid on the account the money is to be transfered from and which would be lost. To include that figure would require infinite examples not just three. As already said, that's a calculation for the individual to work out.

ultrawomble

adindas wrote: »

You have not included my suggestion, switch SO in the following month e.g. December which is previsously November 10 to 1 December, in the following month.

Err, I think you'll find I have:

Option 3
If I open the account on the 10th November 2010 with £500 and make 11 further payments on the 1st of each month (total saved = £6000), and the account matures on the 10th Nov 2011 I'll receive about £169 gross interest (~£135 after 20% tax).

ultrawomble

Rollinghome wrote: »

No, I don't think so.

You might not think so, but I can assure that it is true.

Rollinghome wrote: »

Payments can only be made on consecutive days if the account is opened on the last day of the month and the next payment made on the 1st of the following month.

I know - why do you think I suggested opening the account on the 30th Nov and making the second payment on the 1st Dec.

Rollinghome wrote: »

If the money is currently in an account paying 0% interest, as you assumed, then delaying opening of the account until the end of the month will result in less interest, not more. If interest is being paid then the differential while delaying opening the account would have to be factored in.

I haven't trawled through your examples in detail but can't see any reference to the rate of interest being paid on the account the money is to be transfered from and which would be lost. To include that figure would require infinite examples not just three. As already said, that's a calculation for the individual to work out.

You really should - you might earn some extra interest.

As to you second point, if you already got the money in an interest bearing account, so much the better - you'll be earning interest while you wait until the 30th to make the 1st payment.