12% at Alliance & Leicester?

Thors

Hi

I'm new to all this money saving stuff and have a quick question for you money experts.
The Alliance & Leicester are offering 12% AER for their Premier Regular Saver account. Max £3000 and you have to add min £10 per month. The rate is fixed at 12% gross and you can't touch your money for 12 months.

I see a lot of rates around 5-6%, so does the A&L account have a catch, or is it standard for an account that you can't touch for a year?

http://www.alliance-leicester.co.uk/savings/index.asp?page=prem-regular-saver&ct=quick

Many thanks

Thors

ReportInvestor

Hi Thors and welcome to the site .

You have to open an A&L Premier Current Account to qualify. This is not a big hardship but it only pays 1.5%.

You might think you were better off with a Coventry First current account if you can manage to do without a cheque book. And life would definitely be a lot simpler.

P.S. there was an apostrophe question on the site the other day about "Thor's Hammer" or some such. Have you come here to confuse the issue ?

flyer

But it looks too good to be true

ReportInvestor

The interest on the A&L regular saver is going to be worth just above £180 gross = £134 net for that year.

But you could get over £120 gross with Ipswich BS.

So is it worth running your current account @ 1.5% interest when you could run it at far more (even at A&L) e.g. at Coventry where you get 5.3%.

If you kept £2,000 average in your current account you'd obviously be better off keeping all your money in one Coventry BS account rather than three A&L accounts (Premier Current Account / 12% Regular Saver a/c and ANother account for your savings).

I appreciate that the Coventry First account requires £1K monthly income whereas the A&L Premier Current Account only requires £500 pm.

Strepsy

Would you qualify with the Premier Direct account? 6.1% on that.


Edit: just checked and to answer my own question, no.

YorkshireBoy

Thors wrote:

The rate is fixed at 12% gross and you can't touch your money for 12 months.

Not strictly true. Whilst you can't withdraw from the account, you can close it early and not lose out on the interest already earned.

From the Regular Saver FAQ...

What if I want to withdraw from my Premier Regular Saver?
Withdrawals are not permitted from Premier Regular Saver. If you require access to your funds, the account can be closed by calling Current Account Customer Services on 08459 26 26 26 and speaking with an advisor. The balance, including accumulated interest, will be transferred to your linked Premier Current Account.

ReportInvestor

It wouln't make much sense to go through this palava and not get the 12% over the full one year .

Strepsy wrote:

Would you qualify with the Premier Direct account? 6.1% on that.
Edit: just checked and to answer my own question, no.

Most people woud be better off with the Premier Direct account on its own - keeping an average £2-£2.5K balance rather than transferring money from a low balance 1.5% A&L current account to the 12% A&L Regular Saver.

But they'd be even better off with the Coventry First account because that doesn't have a £2.5K upper limit on its top interest rate .

YorkshireBoy

ReportInvestor wrote:

It wouln't make much sense to go through this palava and not get the 12% over the full one year .

True, but it's nice to know that if something 'happens' in month 10, you can still get your £2.5K and your interest to date.

Thors

Hi ReportInvestor and thanks for the warm welcome.

I haven't come to confuse the Thor's Hammer issue. I'm just the plural of Thor and don't own a hammer.

Yes 1.5% isn't very good, but I wasn't planning to use the current account as my main current account. Is this possible or do you HAVE to transfer all DDebits etc when opeing the account?

So the theory was to put £2850 into the 12% account, and transfer £10 each month for a year, not using the current account at all.

Actually I'm enquiring on behalf of my retired parents, who pay no tax, and a little for myself as I'm with FirstDirect at the moment and looking at different options for when I switch.

Thanks for the Coventry First current account tip, I'll look into it.

EDIT: I see from ReportInvestors later post that you need to put £500/ month into the current account.
And Tom188s post that you can only put £250/ month into the saver, not a lump sum as I had assumed. Thanks Tom

Many thanks

Thors

tom188

You can only pay in a maximum of £250 a month into the reg saver, so it would take you 11 months to get the £2850 in, then it would mature a month later.

tom188

Also if the premier current is like the premier direct, if you dont credit £500 a month to the account you will be charged a £5 underfunding fee. The standing order to the regular saver must come from this account and cannot be amended at all during the term.

After all that its still a good account, im just not sure its what your looking for.