Regular savers explained

Beate

Oh, well I usually do it the other way round. The £250 go from my current account each month (from the salary) into the 8% account. Then, when the year is over and I had my interest, I move the lump sum into the highest paying savings account I have and start another Regular Saver. Don't I get more interest this way? Sorry, I am not very good at maths.

Ian_W

Beate wrote:

So basically if you put in £250 a month for 12 months at a rate of 8% AER, you can roughly say you get 4% of the end amount of £3,000, which is £120 (minus tax). Which is why it is always much better to pack lump sums into savings accounts which pay more than that so you get say 5.25% per year on a £3,000 lump sum.
Right?

If you've got the lump sum to start with the answer is YES - BUT ....
If you're putting monthly savings that aren't a lump sum the same principles apply to your 5.25% - effectively the rate on the £3K works out at half that.

The BUT is - If you have a lump sum in in a higher paying account [why 5.25% when you can get 5.7% or so??] then feed it into the regular saver you do better, particular at 8%, even allowing for transfers in. If the regular saver is <7% that it becomes more questionable as to whether it's worth it IMO.
EDIT: LIPIDICMAN beat me to it!!

Beate

Oh sorry I see - I confused lump sums with regular monthly savings sums! I think I get it now...

lipidicman

Sure diD!

Beate wrote:

Oh, well I usually do it the other way round. The £250 go from my current account each month (from the salary) into the 8% account. Then, when the year is over and I had my interest, I move the lump sum into the highest paying savings account I have and start another Regular Saver. Don't I get more interest this way? Sorry, I am not very good at maths.

Yeah, good as you can do with earned income. In which case the same 'halving' applies to any account you put the money in RS or not.

Now what I do with one of my RS is to put the £3k that comes out into my ISA on the first day of the new tax year. I find the RS a convenient way to make sure I have that £3k ready and waiting

tom188

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monki_man

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free4440273

...just wanted to say what an excellent thread this is - i am also often ambivalent about opening several regular savings accounts as opposed to a one higher savings 2/3 yr fixed bond account. having said, i was glad of the recently opened nationwide regular saver which i have just opened because of convenience - all of my accounts are with them

Robert_Sterling

[QUOTE=free4440273,_i_was_glad_of_the_recently_opened_nationwide_regular_saver_which_i_have_just_opened_because_of_convenience_-_all_of_my_accounts_are_with_them_:)[/QUOTE]

The Nationwide Regular Savings scheme has interesting terms and conditions including an interest rate which can vary, up or down, every month.
If in any one month for example you take out more than you put in then the interest that month is zero.

free4440273

Robert_Sterling wrote:

The Nationwide Regular Savings scheme has interesting terms and conditions including an interest rate which can vary, up or down, every month.
If in any one month for example you take out more than you put in then the interest that month is zero.

...have no intention of doing that. have EVERY intention of shoving in the max £250 each month and not taking anything out. my nationwide bond is also expiring in oct 2007 - hope rates have increased by then, wishful thinking perhaps

Milarky

Robert_Sterling wrote:

The Nationwide Regular Savings scheme has interesting terms and conditions including an interest rate which can vary, up or down, every month. If in any one month for example you take out more than you put in then the interest that month is zero.

I haven't spotted that anywhere, Robert:

Increases and changes in the account balance
22. The overall balance in the account can be increased by a maximum of £250 per calendar month from the starting balance. The starting balance is the account balance at the start of the first day each month. Interest paid to the account does not count towards the monthly increase in balance.
23. You can withdraw any available funds in the account without notice or loss of interest. Withdrawals of interest count as a normal withdrawal from the account.
24. The rate of interest you will receive will depend on the change in the account balance each month.

http://www.nationwide.co.uk/savings/regular_savings/legal.htm

Looks like you can withdraw whatever you like without penalty - so long as you replace that plus add to the balance to get the appropriate rate. The worst that happens is you earn 4.25% on the average balance. [But this could just be misleading reading, and it's actually a bit stricter than this]