Can someone help me with maths and interest calculations pls?

fimonkey

I’m due to inherit 30k and have 6K debt. My original plan was to pay off debt then put rest towards a deposit/fees etc to buy a house as an FTB. However after HEAPS of consideration I think I need to wait a year to make sure I’m ready for such a commitment.

I work in an office with internet access so setting up direct debits and internet banking not a hassle. So here’s my thoughts… for 1 year only, how feasible is the following and what would I gain? (this is where my appalling mathematical ability becomes very evident).

A.Pay off 6K debt.
B. Put 3K into an NS&I ISA at 5.8% (have already opened one of these in anticipation).
C. Put 6K into a current account and then feed the maximum of £250p.m into Barclays regular saver high interest (12.5%. I already have current account with them and can arrange to have my salary paid to them) and Halifax regular saver high interest (7%) again I already hold a current account with the Halifax so meet their conditions.

1.Where would be the best place for the remaining 15K? (I also have an A&L regular saver account which I pay in £100p.m but now that’s set up it can’t be changed).

2.Given that I have three current accounts, would it be worth opening up other current accounts with lLloyds and HSBC to gain from their regular saver schemes? Is there a limit to how many current accounts you can have)?

3. How much interest would I earn on A, B and C (I do not understand compound/daily/monthly interest stuff at all). IS this worth it or would I be better off keeping the money together in just one account? (Don’t mind notice accounts, do not intend to touch the money at all for a year until I’ve made some decisions). If this is the best option, which accounts should I be considering please?

Many thanks in anticipation.

oldfella

B - open one now and another ISA in April

C - forget the current accounts and reg savers - you can make a little extra with a reg saver but as you have a lump sump its marginal. Once the current round of increases have gone through select the best of A&L Direct Saver, N Rock Silver Online, Icesave.

Mike

fimonkey

Cool! Nice idea about the ISA, I didn't realise I could do that! SO that means 6K in and ISA then? (I thought the max allowed was 3K). And can I have two ISA's with the same company??

Can anyone explain to me how to work out the maths in my original wuestion please? I know oldfella says it will be marginal, but I'd like to know exactly what 'marginal' would be. Is it easy to calculate?

Many thanks

oldwiring

What is rate charged on debt?

fimonkey

At the moment, 8.8% APR and it has 3 years before being paid off at the moment, but that will be paid off entirely once I get the money from my inheritence (or is that not a good idea)?

Robert_Sterling

I’m due to inherit 30k and have 6K debt.
A.Pay off 6K debt.
OK A good move now you have 24K

B. Put 3K into an NS&I ISA at 5.8% (have already opened one of these in anticipation).
OK An excellent move now you have 21K
At this point I would put the £21,000 into the Halifax Current Account.
Wait for it to clear
Meanwhile set up a Halifax Online Web Saver Account at 5% with instant transfers from and to you Halifax current account.


C. Put 6K into a current account and then feed the maximum of £250p.m into Barclays regular saver high interest (12.5%. I already have current account with them and can arrange to have my salary paid to them) and Halifax regular saver high interest (7%) again I already hold a current account with the Halifax so meet their conditions.

Stick with the Halifax arrangement.
Do not put 6K into the Barclays Current Account.
Only have a barclays account with regularsaver if you have actually read and fully understand the way it works. If you do go ahead move money from Halifax Websaver to current account ( instantaneous ) then by online transfer into Barclays account. Wait for it to clear ( not instantaneous )
the move it into the regular saver)

Next after 5 April 2007 put another £5000 into a mini cash ISA


1.Where would be the best place for the remaining 15K? (I also have an A&L regular saver account which I pay in £100p.m but now that’s set up it can’t be changed).

Leave it in the Halifax Websaver at 5% unless you find somewhere with No Notice access and paying about 5.5% or higher.

2.Given that I have three current accounts, would it be worth opening up other current accounts with lLloyds and HSBC to gain from their regular saver schemes? Is there a limit to how many current accounts you can have)?

The regular saver schemes pay an enticing rate to get customers for their current accounts. I would not open these two accounts myself but I can see why you might. Make sure you read all the small print and understand exactly what is involved.

3. How much interest would I earn on A, B and C (I do not understand compound/daily/monthly interest stuff at all). IS this worth it or would I be better off keeping the money together in just one account? (Don’t mind notice accounts, do not intend to touch the money at all for a year until I’ve made some decisions). If this is the best option, which accounts should I be considering please?

I would not have more than two current accounts. The Yorkshire building Society have a good regular saver scheme up to £500 per month, interest 6.75%. Read the terms and conditions. Highly recommended by me.

The regular saving schemes are all good but not quite as good as they look.
This is because on average you only have slightly more than half of the total money earning interest.
e.g. First installment is in for 12 months
Second installment is in for 11 months
etc
etc

12 installment is in for only 1 month






Many thanks in anticipation.[/QUOTE]

Robert_Sterling

At first sight it would be a good idea to pay off the 8.8% loan but if there is a redemption fee then it might not be a good idea. Check the terms and conditions.

fimonkey

Thank you so much Robert, the loan does have an early redemption fee, which is 2 months interest of the outstanding balance. (Again maths lets me down, but it would be 6K at 8.8%, 2 months interest on that figure). Based on that, is it worth me paying off this loan early?