interest payment

maypole

Wages go into the bank on last day of month. All Direct debits go out of current account on first day of month. I get interest on my account. Would it be better to pay direct debits at end of month, would this maximise interest paid or make no difference.

Thankyou

maypole

ReportInvestor

It sounds a very good arrangement that minimises the time any money is in your current account yet keeps the bank happy and avoids any chance of you going overdrawn.

DavidHM

You would get extra interest, but at the cost of making your budget harder to plan as the money would be sitting there until the very last minute.

It depends really on whether you like engaging in "stunt budgeting" or not.

steady__eddie

One along the same lines here, wages get paid into my flexaccount and anything surplus to immediate requirements is swept into my e-saver until I comfort save somewhere else. Flexaccount interest (currently 4.5% I think) is paid on 31st of December. E-saver interest (currently 4.8% I think) is paid on 31st of March.
Would it be adavantageous to transfer e-saver funds to my flexaccount now ? I know that the interest rate is marginally lower but the interest would be capitalised 3 months earlier. On 01/1/07, I could then transfer it back to my e-saver.
If any mathematicians read this and fancy a challenge, a formula for the optimum transfer time from e-saver to flexaccount wouldn't go amiss.

ReportInvestor

steady__eddie wrote:

Would it be adavantageous to transfer e-saver funds @4.8%] to my flexaccount [@4.5%] now ? I know that the interest rate is marginally lower but the interest would be capitalised 3 months earlier. On 01/1/07, I could then transfer it back to my e-saver.

No. The extra interest on the interest in this case would be tiny.

Cue Robert Sterling, Milarky et al for when it would be worth it.

kenshaz

steady__eddie wrote:

One along the same lines here, wages get paid into my flexaccount and anything surplus to immediate requirements is swept into my e-saver until I comfort save somewhere else. Flexaccount interest (currently 4.5% I think) is paid on 31st of December. E-saver interest (currently 4.8% I think) is paid on 31st of March.
Would it be adavantageous to transfer e-saver funds to my flexaccount now ? I know that the interest rate is marginally lower but the interest would be capitalised 3 months earlier. On 01/1/07, I could then transfer it back to my e-saver.
If any mathematicians read this and fancy a challenge, a formula for the optimum transfer time from e-saver to flexaccount wouldn't go amiss.

Well now I can see why you are called steady-eddie,go on take a chance move it to ICICI www.icicibank.co.uk
5.45%

maypole

Thank you for all replies.


DavidHM - What the hell is "stunt budgeting"?



Thanks

Maypole

Stonk

maypole wrote:

DavidHM - What the hell is "stunt budgeting"?

A watered-down version of extreme budgeting.

(Nice one - I've been looking for some terms for this!)