Saving tart

bazhance

I tend to move my money around to get the best rate but as most online savings accounts link back to your current account it takes some time to transfer to the current account and then to transfer to the new account so my question is how much extra interest rate does there need to be to make it worthwhile moving your money and in what time frame.Has any one done any work on this?Cheers

kingmonkey

You need to work out whether the amount of interest earned on the account your transfering too is more than the cost to transfer it.

bazhance

That is my question--How?

FaTB

I have just moved all my savings, from ING to IceSave, and it did take a while, and it will probably take a few months to make up for the lost interest.

But IceSave now give nearly 1% more than ING, and I moved my money more out of principle than the extra money I would earn.

I wanted to send the message to ING that I would not just sit passively by whilst the BOE rates went up and they did nothing.

I'm sure they were very quick to put up their lending rate !!

ManAtHome

I don't bother for less than 0.5% - ignoring tax for the moment and asssuming a week to move, it would take 10 weeks to get the interest back on a move from 5% to 5.5% (5 divided by 0.5).

Easy numbers - 5.2% gets you £1 a week per £1000 (£52 a year), so transferring would cost you £1. The new account (5.7%) would give you an extra fiver a year, so around a quid every 10 weeks...

Anyway, regardless of all that, if more poeple moved theor savings more often, maybe the banks (especially ING) would stop deciding that we prefer a "consistent rate" (lol) - mine now goes back to ING when they offer 6.2% or better...

venkat_2

i move mine at the slightest change. i know it will take time to recoup what has been lost on a small %age differerence, but as someone has already said, if everyone moved for that reason, then banks would act more quickly to move rates up

The_Dabbler

To calculate lost interest ;
Amount x Interest rate(push % button on calculator) divided by 365 x number of days of lost interest.
e.g £5000 x 4.75% divided by 365 x 5 days = £3.25.
If earning 1% extra interest then using formulae above £5000 x1% divided by 365 = .136p for 1 day. Divide £3.25 by .136 and this = 23 days to recoup interest lost.
The trick is to open the new account with the smallest amont necessary then move the rest of the money. But and here's the tricky part - Instruct say ING to transfer the money to your own Bank a/c on say Monday and it will arrive in your account in 3 days i.e. Wednesday. But on Monday you also instruct Icesave to Debit your Bank a/c with the same amount of money and this also hits the account on Wednesday. Thus you minimise the interest lost.

The_Dabbler

To calculate lost interest ;
Amount x Interest rate(push % button on calculator) divided by 365 x number of days of lost interest.
e.g £5000 x 4.75% divided by 365 x 5 days = £3.25.
If earning 1% extra interest then using formulae above £5000 x1% divided by 365 = .136p for 1 day. Divide £3.25 by .136 and this = 23 days to recoup interest lost.
The trick is to open the new account with the smallest amont necessary then move the rest of the money. But and here's the tricky part - Instruct say ING to transfer the money to your own Bank a/c on say Monday and it will arrive in your account in 3 days i.e. Wednesday. But on Monday you also instruct Icesave to Debit your Bank a/c with the same amount of money and this also hits the account on Wednesday. Thus you minimise the interest lost.[/QUOTE]

kingmonkey

The_Dabbler wrote:

Instruct say ING to transfer the money to your own Bank a/c on say Monday and it will arrive in your account in 3 days i.e. Wednesday. But on Monday you also instruct Icesave to Debit your Bank a/c with the same amount of money and this also hits the account on Wednesday. Thus you minimise the interest lost.

Can you really do and rely on that?

webwiz

The_Dabbler wrote:

To calculate lost interest ;
Amount x Interest rate(push % button on calculator) divided by 365 x number of days of lost interest.
e.g £5000 x 4.75% divided by 365 x 5 days = £3.25.
If earning 1% extra interest then using formulae above £5000 x1% divided by 365 = .136p for 1 day. Divide £3.25 by .136 and this = 23 days to recoup interest lost.
The trick is to open the new account with the smallest amont necessary then move the rest of the money. But and here's the tricky part - Instruct say ING to transfer the money to your own Bank a/c on say Monday and it will arrive in your account in 3 days i.e. Wednesday. But on Monday you also instruct Icesave to Debit your Bank a/c with the same amount of money and this also hits the account on Wednesday. Thus you minimise the interest lost.

[/QUOTE]

This risks going overdrawn and whether you do it depends on your relationship with your bank. The alternative is to transfer the money over two weeks. In the first week on the Monday or Tuesday transfer the money to your current account. Never later in the week or it will be "in limbo" over the weekend. Watch for it's arrival on Thu or Fri and immediately transfer it into a savings account with the same bank as your current account so it goes immediately (this works with First Direct - you will have to check by experiment with your bank). Then move it to the new savings account on Mon or Tue the next week.

If, like me, you can be bothered to go to all this trouble to save a few quid maybe you should get out more!

DocProc

There is a useful online calculator, which was kindly provided by one of the contributors on this website, and which can help with the calculations associated with CHAPS and BACS transfers. It is at

http://chaps.kiltoxservices.net/

When rate tarting, I have found it generally helps to take cash out of the old, poor interest rate paying, savings account on a Monday with a Push from the savings account into the current account. The transaction has been done for free and it is then available on a Wednesday in the current account as cleared funds.

Next I would pay a CHAPS fee to the current account bank and do a transfer that same day into the new, better paying savings account.

If I didn't do this, I would do an intra-bank transfer and pop the funds into the current account bank's online saver on the Wednesday and then set up a Pull within the new savings account to pull the cash from the current account into the new savings account to affect the latter on the following Monday - all whilst not forgetting to go online at the weekend and do an intrabank transfer to ensure the funds are actually available and in the current account to meet the incoming transfer request on the Monday (otherwise the current account would actually/theoretically overdraw and the transaction might fail).

By the way, I am talking largish amounts with my examples.

Golly gosh! Is this stuff complicated or what?

Answer: VERY, VERY COMPLICATED.