Halifax And Interest Calcs

WHIZKID2

ASKED HALIFAX IN OCT WHEN MONTHLY SAVER ACC 1YR OLD (TOTAL £5K, 5.34%INT) SHOULD SON CONTINUE UP TO MAX/MONTH OR DROP TO mIN £5 & OPEN THE NEW mONTHLYKIND OF SAVERACC AT £7.07%. MY GUT FEELING CHANGE, THEY SAID NO. ASKED AGAIN LAST WEEK, STILL SAID NO. SURE I'M RIGHT. IN MEAN TIME CHANGED HIS PAYMENTS DUE TO FINANCIAL CONSTRAINTS( BUT NOT TO MINIMUM) NOW POSITIVE I'M RIGHT WANT TO CHANGE TO MIN & OPEN NEW ACC AS ORIGINAL INTENTION BUT WILL ONLY GET HALF INTEREST(2.56%) AS ONLY 1 CHANGE ALLOWED. WILL LOSE ABOUT £166, BUT WHEN ASKED THEM TO PROVIDE CALCS OF INTEREST TO BACK UP THEIR ADVICE, SAID COULDN'T. HOW DO YOU CAL INT ON £5000, +£100/MONTH AT RATE 5.34% AER,5.3%GROSS

CAN'T BELIEVE HALIFAX HEAD OFFICE, BRANCH MANAGER, FINANCIAL ADVISOR CANNOT ACCESS SPREADSHEET TO PROVE THEIR POINT.

lipidicman

Wow, ease off with the capitals.....

I have both the accounts of which you speak. The downside of the regular saver is that it empties each year, so in that respect the monthly saver has its advantages. You cant get 5.34% on any other branch account that I know of! With the regular saver you need a good home for it when it empties after one year....like an ISA...more about that later...

Monthly saver terms

# Two payments allowed each month, one of which must be by standing order
# Variable interest paid annually
# Opportunity to earn an annual bonus to help your savings grow
# Miss one monthly payment without losing your bonus
# Make up to two withdrawals a year the first without any loss of interest or bonus

As I understand it you can change the amount of the standing order as much as you like as long as you pay in the £5 minimum amount

I can help you with the interest. Very approximately you will have an average balance of £2500 (but you dont say when you changed the payments from £500pm to £100pm so I cant do any better than this) so

2500x0.0534=133.50

So roughly £130 gross interest, or £105 basic rate taxpayer net

Another question I have is does your son have an ISA, if not get some of it in an ISA for him (if he is over 16) even if he isnt a taxpayer - he will be eventually and if you dont use it you lose it!

HTH

WHIZKID2

lipidicman wrote:

Wow, ease off with the capitals.....

I have both the accounts of which you speak. The downside of the regular saver is that it empties each year, so in that respect the monthly saver has its advantages. You cant get 5.34% on any other branch account that I know of! With the regular saver you need a good home for it when it empties after one year....like an ISA...more about that later...

Monthly saver terms

# Two payments allowed each month, one of which must be by standing order
# Variable interest paid annually
# Opportunity to earn an annual bonus to help your savings grow
# Miss one monthly payment without losing your bonus
# Make up to two withdrawals a year the first without any loss of interest or bonus

As I understand it you can change the amount of the standing order as much as you like as long as you pay in the £5 minimum amount

I can help you with the interest. Very approximately you will have an average balance of £2500 (but you dont say when you changed the payments from £500pm to £100pm so I cant do any better than this) so

2500x0.0534=133.50

So roughly £130 gross interest, or £105 basic rate taxpayer net

Another question I have is does your son have an ISA, if not get some of it in an ISA for him (if he is over 16) even if he isnt a taxpayer - he will be eventually and if you dont use it you lose it!

HTH

sorry about the capitals, i'm very new to this! what i really need to know is how the interest is calculated. if you have £1000 and add say £100 per month at a rate of 5.34% aer is it month1 1000+100*0.0534/12=1104.89
month2 1104.89+100*0.0534/12=1210.25and so on
and what is the difference between gross and aer

thanks for the isa tip, already got that covered

lipidicman

Right I will have a go at this

The AER is a notional rate for reinvestment of interest so you can compare rates which pay out over different periods (eg monthly or yearly)
If the interest is paid yearly the AER=gross
If it is monthly the AER will be higher than the gross rate

You cant divide the AER by 12 to get a monthly rate, a monthly rate is worked out by doing 1.0534^(1/12)

I should point out that 'monthly rate' is not really accurate as each has a different number of days!

You can bet that the bank will do it daily but you can do it like this:

(£1000+£100) x 1.0534^(1/12) = £1104.78
(£1104.78+£100) x ..........
and so on
this is pretty easy to set up iteratively if you can use excel to a reasonable level

this assumes an average month length and that the payment of £100 went in on the first day

HTH

WHIZKID2

just had brill result with halifax. they compensated son for WHOLE!!!!! amount of interest that would be lost over year. thanks for help with calcs. well done to richard(manager) and jenna at my local branch, your PR could not have been better.

lipidicman

Please explain, the interest that would be lost how? by not upgrading to the 7 percent, or by losing your bonus.

I have changed my SO on the monthly saver (the 5.35% one, not the 6%/7%) and been told i wont lose my bonus. You are making me a littlwe nervous. Let me know!

Halifax are very good to you if you are a valuable customer. We have lots with them, and they waved an account charge once we asked for the manager, they had made a mistake though!