Skipton Building Society Questions and Answers

adindas

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.

ultrawomble wrote: »

Err, I think you'll find I have:

ultrawomble

adindas wrote: »

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, 2010.

What's your point?

10th Nov 2010 - 10th Nov 2011 = 365 days

30th Nov 2010 - 30th Nov 2011 = 365 days

Rollinghome

ultrawomble wrote: »

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

Perhaps because you thought today was the 30th? It's actually the 25th and was the 24th when you did your calculation. You will earn zero interest from Skipton during the time delayed in opening the account but not mentioned in your "calculations".

You actually said: "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 ". Which rather seems to imply that your theory would apply at any time, not just this week.

ultrawomble wrote: »

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.

Indeed, and be losing interest on the £500 from point it's transfered and without knowing what that rate of interest is then your calculations of what could be gained make no sense.

adindas

You fail to see the opportunity cost.
You have opportunity to put your money asap e.g November 10, because you believe you will be better off to wait until November 30. But you do this without earning any interest at all from November 10 - November 30, 2010.

You have the opportunity to put your money on November 10, but you forgone it and wait until November 30. So the starting point of both shall be November 10,2010 and end November 30, 2011.

1. If I put my money on November 10, 2010. The money will be free on November 10, 2011.

2. If I put my money on November 30, 2010. The money will be free on November 30. So my interest will be paid until 30 November 2011.

Because on 1 I put my money earlier, I already get £6000 + Interest by November 10, 2011. I will have the opportunity to put this money again immediately to another high interest high interest saving a/c (say 5% APR) until November 30, 2011 (e.g to match the same time frame with 2) so the interest you count on 1 shall be added with another (£6000+Interest) for another 20 days with 5% APR. Are you still saying you will be better off ??

Switch your SO to 1st in the following month, is definitely a sensible approach. In the above case I will put my the second and the rest of installment on December 1st each month.

But you do not need to wait until the end of the month if your money earn no interest at all.


ADINDAS

ultrawomble wrote: »

What's your point?

10th Nov 2010 - 10th Nov 2011 = 365 days

30th Nov 2010 - 30th Nov 2011 = 365 days

ctdctd

ultrawomble wrote: »

Lots of sensible sums!

Nevermind Ultrawomble, I understand

To the doubters - it always makes sense to get the cash earning a higher rate of interest as soon as possible.

This account became available on the 22nd of November.
You will earn the most interest possible if you opened on the 22nd November and make all future payments on the 1st of each month up until 1st October 2011 with the account maturing on November 21st 2011.

HTH

Rollinghome

ctdctd wrote: »

This account became available on the 22nd of November.
You will earn the most interest possible if you opened on the 22nd November and make all future payments on the 1st of each month up until 1st October 2011 with the account maturing on November 21st 2011.

Agreed. Always bearing in mind that these regular savings accounts only allow fairly small contributions so the average amount over the year is going to be very small anyway.

ultrawomble

Rollinghome wrote: »

Perhaps because you thought today was the 30th? It's actually the 25th and was the 24th when you did your calculation. You will earn zero interest from Skipton during the time delayed in opening the account but not mentioned in your "calculations".

You actually said: "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 ". Which rather seems to imply that your theory would apply at any time, not just this week.
Indeed, and be losing interest on the £500 from point it's transfered and without knowing what that rate of interest is then your calculations of what could be gained make no sense.

No errors on by side. I know what day it is and I also know how to calculate interest. That is why I said it is better to open the account on the 30th i.e. make the first payment.

ultrawomble

Rollinghome wrote: »

Always bearing in mind that these regular savings accounts only allow fairly small contributions so the average amount over the year is going to be very small anyway.

You're quite wrong.

Try this example at 5%:

Pay in 12 istallments of £500 on the 1st of every month starting on the 1st Dec 2010. At maturity on 1st Dec 2011 you'll receive £161.46 gross (£129.17 net).

Pay in £500 on the 30th Nov 2010 and then 11 payments on the 1st of every month starting on the 1st Dec 2010. At maturity on 30th Nov 2011 you'll receive £183.69 gross (£146.96 net).

As you can see, if you open the account 1 day earlier in the previous month you'll be £22.23 gross (£17.79 net) better off.

SnowMan

ultrawomble wrote: »

As you can see, if you open the account 1 day earlier in the previous month you'll be £22.23 gross (£17.79 net) better off.

Of course in the 1st December example you can invest each of the subsequent £500 payments in an instant access account at say 3% for a month as they are paid a month later than the 30 November example. So if we are making any sort of meaningful comparison the gain is perhaps £7 not £17 net.

And that's the most extreme scenario. Pretty small amounts as rollinghome says.

Don't suppose there's any chance of calling a truce and reverting to Q and A for the Skipton representative............?

VT82

I'm not going to go into sums but I totally agree with ultrawomble (and hence think Caroline is incorrect).

If you take as your timeframe the 21st November 2010 to 30th November2011, assume you have some money (over 6 grand for arguments sake) in an instant access savings account paying x% (x < 5) when not in the regular saver (including before 30/11/2010 in ultrawomble's scenario or after 21/11/2011 in ADIDNAS's scenario), and 5% when it is in the regular saver, you will see that ultrawomble is right.

In ADIDNAS's argument, it is not reasonable to assume you would get 0% on your savings until 30/11/2010, but that you can reinvest in a high interest savings account after 20/11/2011. That is where the argument falls down.

The only way investing before the last day of the month would be financially better is if the rates available in the instant access product is substantially higher after 20/11/2011 than it is before 30/11/2010. This doesn't seem likely to me.

But yeah, a truce is a good idea. It's not that much money we're talking about.

I guess my question to Caroline would be 'are you regretting signing up for this gig, when it will likely lead to being a full time job, you will be going through all this work just to answer the questions of a few crackpots and a few dozen savings obsessives, and any small mistake you make will be pounced upon?'