savings interest rates

raldaman

I'm no good at working these things out so could anyone with a maths brain tell me what the difference would be over 1 year if investing £2000 per month at 5.5% (Coventry 60+ saver easy access) or £24000 up front at 5.45% p.a (Icesave and ICICI bank)
I suspect the latter but what would the difference be?

raldaman

jennifernil

The latter would give you just under twice the interest of investing monthly. But where will the rest of the £24000 be meantime while you are depositing £2000 per month with the Coventry? Surely it will also be earning interest somewhere. Put the £24000 into Icesave or ICICI then you could transfer £2000 per month to the Coventry. But the loss of interest in the transfer period might negate any increase in interest earned.

djohn2002uk

jennifernil wrote:

The latter would give you just under twice the interest of investing monthly. But where will the rest of the £24000 be meantime while you are depositing £2000 per month with the Coventry? Surely it will also be earning interest somewhere. Put the £24000 into Icesave or ICICI then you could transfer £2000 per month to the Coventry. But the loss of interest in the transfer period might negate any increse in interest earned.

Why move £2000/month to an account where he will effectively only get approx half the interest?

ManAtHome

With a regular saver you can work it around half the quoted interest rate at the end of the year (as you start with your first payment and get very little off your last - average balance is therefor around half the total).

Now, assuming you are transferring from another savings account, you gain would be half the difference between the rates - in this case 0.025% (5.5 - 5.45 / 2), I make that around £6... (as Jennifer said you'd probably lose that during transfer periods).

A 1% difference in rates would get around £120 - more worthwhile looking at some of the higher-rated regular savers.

fbrj

What about this? :

http://www.northernrock.co.uk/savings/silver-savings-online/

pays more than ICICI and Icesave - instant access too; guarantees not quite so good...but you can always move £ as necessary.....