bradford and bingley 10% con???????

karenmc_3

In Jan 06 Bradford and Bingley advertised a 10% christmas interest account. Put in between £10 to 150 per month until 1 dec 06 and you would recieve 10% interest.
My mum did this and has regularly scrimpped to make the full 150 over 10 months. As the account says you have to withdraw your money on the 1 of dec 06 but can switch it to other accounts.
She expected to recieve about £150 in interest as this is was she was told when she opened the account, Instead she has recieved £56.52.

She feel very agreaved. Has this happened to any one else? What do you think?

mary

I'm afraid to say someone has misled you or else you have not understood fully what the 10% is on. Each month you put aside £150 and get 10% on that money for that month. The last payment you put in is only there for one month, your first payment is there for longer, i.e. 10 months. It is not 10% on £1,500, being £150 as your Mum was told, as all that money is not in there for the full length of time. Mine matured recently and I got roughly the same as you, give or take a few pennies.

Cypher

I've just done a rough calc and I got it to £56.22. (Saving £150 on the first of every month with interest also paid on the 1st of the month)

As well as what Mary mentioned above RE: the way regular savers earn interest. You have also paid 20% of the interest in Tax which has reduced the interest from £70.63 (£14.41 has been paid in tax)

A further thing to notice is you make an initial payment on 1st Jan but the money has to leave the account on the 1 Dec 06. So that initial money was only earning interest for 11 months not the full 12.

metrobus

This type of posting comes up every other day by people who do not understand how regular saveings accounts work,you only get paid interest
on the money for the time its been deposited the last payment of £150 would only have earnt 1 months interest (£1.25gr/£1.00 net).

I would have thought it obvious that you would not get £15 gross interest for
£150 over 1 month that would equate to a interest rate of 120%

MarkyMarkD

KarenMC

As this subject has been posted dozens* of times before, almost always by new site members, can I suggest that you do a search before posting repetitive questions?

Thanks

MMD

* (OK, probably an exaggeration, but it feels like it)

Pink.

Well said Tustastic.

Welcome to MSE karenmc, I hope you find the answer to your question on these boards. Most people here are very helpful.

Pink

heppy23

MarkyMarkD wrote:

KarenMC

As this subject has been posted dozens* of times before, almost always by new site members, can I suggest that you do a search before posting repetitive questions?

Thanks

MMD

* (OK, probably an exaggeration, but it feels like it)

Can someone point me in the direction of more info about the flaws of regular savers as I have searched and can't find much.

As far as I can see the downsides are that you can't start them off with a large lump sum and you can't pay much money into them.

RayWolfe

Tustastic wrote:

By and large you will get excellent advice from friendly people on here, and you will learn a great deal. To quote Martin, 'there's no such thing as a stupid question'.
Cheers
Tustastic

I agree, but the OP could have just looked to the left and very easily found: http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1108401263,93536,
There is a difference between holding someone's hand and doing everything for them. ;-)

MarkyMarkD

Yep, Ray. I hope that Tustastic and Pink-winged comments weren't sarcastically aimed at me.

In response to heppy23, there are no "flaws" of regular saver accounts, as such. They aren't meant to be accounts for depositing large lump sums - so why should they allow it? They are vehicles to encourage regular savings, and in the main they pay over the odds (compared to other non-regular savings accounts) for the balances involved.

People who call them flawed, because they can't put in £1,000 for a year at 10% interest and earn £100 in interest (or, indeed, £100 a month for a year at 10% interest and earn £120 in interest), simply aren't making the effort to understand what "regular saver" means or how interest works on every savings account - and it's pretty obvious, in layman's terms, that "regular saver" refers to an account for making regular savings, and interest is calculated on the balance actually in the account, not the money you haven't put in yet!

Madiba_2

Its one of those things that seems very simple *after* you have understood how interest rates work.

Its a fair enough question, but there was an article written on the main part of the this site thats still to be found under the "Savings and Investments Section"

One of my fave reggy savers is the Lloyds one, mainly cos its over 2 years, so you effectively start off with a 3500 lump sum in the second year if you invest the full £250 plus the £500 kick start amount. Earns about £460 interest over 2 years. Pretty good me thinks.

Cypher

Madiba wrote:

One of my fave reggy savers is the Lloyds one, mainly cos its over 2 years, so you effectively start off with a 3500 lump sum in the second year if you invest the full £250 plus the £500 kick start amount. Earns about £460 interest over 2 years. Pretty good me thinks.

I agree, I can't afford £250 a month but I put in as much as I can afford each month. :money:

Also started one for my 16 year old son, which at the moment due to his previous savings, I am drip feeding at £250 a month. His drip money will run out after 2K but his is all earning 8% as he's a non taxpayer. :T