A&L 10% Regular Saver - Wrong Interest

codetown

Hello,
I had a A&L Regular Saver which just reached maturity on the 5th January 2006. About a month ago I received a letter From A&L stating something along the lines: "Your maturity balance is forecast to be £3162.67, assuming all 12 payments are made.....".

I had initially set-up a standing order of 250 GBP per month and everything seemed ok during the 12 months. The predicted interest of 162.67 seemed correct to a simple calculation.

But I just checked this morning and I can see that the regular account has been closed with a final balance of £3131.13.
This is over 30 pounds short of what A&L had communicated and what I had calculated as well. They have credited the interest in two parts, with the first part being early at the beginning of December (£106.90) - I assume by mistake as reported by others- and the second part deposited the day of closure (24.23). The toal net interest is wrong!

Has anyone had this error?
I will contact A&L immediately to ask clarification of what is happening!!

ctdctd

codetown wrote:

Hello,
I had a A&L Regular Saver which just reached maturity on the 5th January 2006. About a month ago I received a letter From A&L stating something along the lines: "Your maturity balance is forecast to be £3162.67, assuming all 12 payments are made.....".

I had initially set-up a standing order of 250 GBP per month and everything seemed ok during the 12 months. The predicted interest of 162.67 seemed correct to a simple calculation.

But I just checked this morning and I can see that the regular account has been closed with a final balance of £3131.13.

Don't think it's wrong - A&L figure seems about right
You have had 250 x 12 months + 250 x 11 months + 250 x 10 months .............. all at 10% PA (0.83333% PM) less 20% tax.

So the 1st 250 earns 250 x (0.0083333 x 12) = 25.00
2nd 250 earns 250 x (0.0083333 x 11) = 22.92
Or for the whole year 250 x (0.0083333 x (12+11+10.......= 78) = 162.50
162.50 - 20% = 130.00

Kazza242

codetown wrote:

Hello,
I had a A&L Regular Saver which just reached maturity on the 5th January 2006. About a month ago I received a letter From A&L stating something along the lines: "Your maturity balance is forecast to be £3162.67, assuming all 12 payments are made.....".

Their forecast was made assuming the interest was paid gross. If you deduct 20% (basic rate) tax from this you would receive around £130.

codetown wrote:

I had initially set-up a standing order of 250 GBP per month and everything seemed ok during the 12 months. The predicted interest of 162.67 seemed correct to a simple calculation.

But I just checked this morning and I can see that the regular account has been closed with a final balance of £3131.13.
This is over 30 pounds short of what A&L had communicated and what I had calculated as well. They have credited the interest in two parts, with the first part being early at the beginning of December (£106.90) - I assume by mistake as reported by others- and the second part deposited the day of closure (24.23). The toal net interest is wrong!

Has anyone had this error?
I will contact A&L immediately to ask clarification of what is happening!!

The amount of interest you've been paid sounds correct, if you're a basic rate taxpayer. If you input the figures into the Smile Regular Savings calculator and select a basic rate tax status the result is £130 interest.

YorkshireBoy

The difference is due to 20% savings tax - isn't it?

Avg balance = 3000/12*6.5 = £1,625

Gross Interest = £1,625 * 10% = £162.50 (A)

20% tax = £32.50 (B)

Net return = (A) - (B) = £162.50 - £32.50 = £130

Walshy

Thanks guys.

My situation was exactly the same as the OP and I was also worried that I hadn't been paid enough.

[Deleted User]

Kazza242 wrote:

The amount of interest you've been paid sounds correct, if you're a basic rate taxpayer. If you input the figures into the Smile Regular Savings calculator and select a basic rate tax status the result is £130 interest.

Kazza, your link does not appear to work. Try here

(You can select your own interest rate on the 'select smile product' line, using the drop-down menu.)

codetown

Ok,
I think A&L tricked me with their prediction letter. I tought that amount was referring to a basic rate payer, but I now see from your calculations everything is all right!

BTW: Will any of us be allowed to open another Regular Saver with A&L?
The only method is closing the A/C and reapply after 3 from scratch or is there an alternative for those who matured it once?

System

Just to remind those who opened this account using the Premier Direct account to feed your savings into. If you dont close the account, or at least change the account to the lower interest one (cant remember the name of it) and fund it with £500 they will slap on an underfunding fee. I was going to leave my money where it was gaining 5% interest until it dawned on me that unless i was prepared to continue moving £500 in and out again, i would be charged for the privilige. Sod that for a lark i could move it into my Websaver and not be charged for it!

As far as i am aware, the newer version of the Premier Direct 12% savings account is only for new customers. Shame really.

My letter of closure to the A&L is sitting on the side of me here, ready to post.

ctdctd

Judi wrote:

As far as i am aware, the newer version of the Premier Direct 12% savings account is only for new customers. Shame really.

My letter of closure to the A&L is sitting on the side of me here, ready to post.

Might be worth waiting a month before posting it. The 12% regular saver is being withdrawn - maybe they will replace it with one open to all?

tom188

ctdctd wrote:

Might be worth waiting a month before posting it. The 12% regular saver is being withdrawn - maybe they will replace it with one open to all?

Alternatively pigs might fly. Since when has AL ever done anything for existing customers.

RayWolfe

tom188 wrote:

Since when has AL ever done anything for existing customers.

Sound a bit like Life of Brian. What have the Romans ever done for us ...
Ray ;-)