7.25% interest for people receiving child benefit!

lipidicman

Doh, sorry CQ, thought it was your post, oops

Thought you were getting a bit heated with westernpromise, then I did the same. Sorry again

and......chill! (couldn't resist it!)

westernpromise

Curry_Queen wrote:

Can you recommend any other savings accounts that I might get a better return on my money then please?

Curry Queen,

Don't get me wrong, it's really not at all bad, it's just not quite as great as it looks, particularly if you expect to top it up with extra cash or to keep it for a few years.

7.25% on the average balance of £400 is £29 gross. If you then pay another £400 a year to the account (I'm assuming your savings target of £100 a month includes the £800pa child benefit) you'll earn the top up rate of 5.25% on that, i.e. another £10.50.

So, overall, it pays £39.50 in the first year on the kind of amount you said you hope to save in it. £39.50 = 6.6%.

So on the amounts you have in mind, it's actually lower than the Halifax deal pays.

Admittedly the Halifax doesn't allow withdrawals. Fair point.

The best building society saver account which does is, AFAIK, Derbyshire BS at 5.85%. Here's a link with more info - you can put in between £10 and £1000 a month, you can miss one month a year, and you can make one withdrawal per year:-

http://loans.ftyourmoney.com/savings/SavingsDetails.asp?SavingsID=16151&Amount=100&Lender=

The crossover point is about £2,800 a year - if you pay that amount or more into either a Coventry or a Derbyshire account, you'll earn about the same from each.

The catch though is that the Coventry deal decays - IIRC, you only get 7.25% on the child benefit payments for the first year. After that, it only earns 5.25%. So after a couple of years, once you've got about £2 to £3k in there, it isn't the best deal.

They are very cunning, these people :-) but so are we :-) :-)

What you could do is combine them. Put the first £800 a year into a Coventry account at 7.25%, but put everything above that into a Derbyshire account at 5.85%.

After a year, last year's child benefit payments drop from earning 7.25% to 5.25%. So withdraw them from the Coventry and pay them into the Derbyshire instead (or whatever's top of the table by then).

If you do need to make an emergency withdrawal, you still can. Make it from the Derbyshire first, because you miss out on less interest than you would if you raided your Coventry piggy bank.

** edit: link added

Curry_Queen

Thanks for all the info westernpromise ... I'm pretty new to all this money juggling and savings lark, having only found this site a month ago, so got lots to learn yet

I'm still in the process of re-building my credit history so don't want to rock the boat too much by applying for accounts all over the place but thought the Coventry one looked pretty decent to run for a year and then reconsider my options. From what you're saying it looks like I didn't make too bad a choice so I think I'll stick with it for now as I'm not expecting to save vast amounts and CB is increasing in April anyway, so that will give me £910 at 7.25% and whatever I manage to top up at the lower rate (which is currently better than I get with my Lloyds online saver and current accounts)

westernpromise

Curry_Queen wrote:

CB is increasing in April anyway, so that will give me £910 at 7.25% and whatever I manage to top up at the lower rate (which is currently better than I get with my Lloyds online saver and current accounts)

Sounds like a good approach. Investment experts often say the best thing to do with stock market investments is put your money in then forget about it for 20 years. It may be true for shares but it's the exact opposite of what you should do with cash! Stay on the case, and check every 3 to 6 months that your accounts are paying a competitive rate.

TraceyD_4

:rotfl: Got the info on this one today and the interest rate falls to 6.25% after a year not 5.25% That rate is for the saver account which is run concurrently with the Family Benefit account! :j

Kallisti

Has anyone actually tried to open this in their kid's name? It sounds like a useful way of making up the £100 tax free that the kid can make on such money! (penny pinching at it's best). For one, I agree that the flexibility of being able to withdraw and the lack of risk of loosing most of the interest due to rules being broken make it worthwhile as a "set and forget" bit of saving. It'll be nice to come across the extra cash in a couple of years time (hopefully!)

TraceyD_4

Would imagine that you can't open in it child's name because they ask for all the benefit details and this is paid to the main carer anyway and not to the child. Have found the whole process quite painless and now have the account opened. Only one slight thing you end up with two cash cards one for the saver account and one for the family benefit account - could be confusing :rolleyes: Also have decided to live with the idea of them knowing my main bank account details! for the sake of the interest rate.