One for the interest gurus. What'd net me more?

Nine_Lives

I was waiting on returning to work before throwing an amount in a 1yr fixed account (as i've been off for some time), just to see if i could hack it, before locking that money away for so long.

I got on fine, but then when i check, the rate has dropped from 3.4% to 3.3% (FirstSave).

So i was looking today at the option of regular savers (am already doing FD)

4% seems to be the rate right now. So what'd net me more over 12 months?

* sticking, let's say, £5000 into a 3.3% 1yr fixed rate account all in 1 whack.

* leaving the £5000 in my Santander eSaver which gives 3.1% & then drip feeding this into 2 regular savers @ £250 per month. As said, from what i read, 4% seems to be the figure now.

What'd be the difference in interest between the 2 options at the end of 12 months?


EDIT: Scratch that. I've had a proper look at what's on offer & i can't get 2 reg savers at 4% for £250 each per month...
...1 of them would have to be £200 per month.

pqrdef

£5000 will only cover 2 x £200 per month. But the overall rate you get will be close to the average of 3.1% and 4%, i.e. 3.55%. Exact calculation depends on a lot of details, but between 3.5% and 3.6%.

YorkshireBoy

1. £5,000 x 3.3% = £165.00

2. (12 x £250) x 4% / 12 x 6.5 = £65.00
3. (12 x £250) x 3.1% / 12 x 5.5 = £42.63

4. (12 x £165) x 4% / 12 x 6.5 = £42.90
5. (12 x £165) x 3.1% / 12 x 5.5 = £28.13

6. £20 x 3.1% = £0.62

2+3+4+5+6 = £179.28 (giving an aggregate return of 3.5856%)


All figures are gross. Multiply by 0.8 for net.

Nine_Lives

pqrdef wrote: »

£5000 will only cover 2 x £200 per month.

Ah you know what i've done there - to work out 12 months of 250, i go £250 * 10 months making an obvious £2500, but i then forgot to do the extra 2 months :rotfl::T. As i was looking at 2 of them, i doubled this up to £5000 (before i found out the other account only allows £200pm). Some folk could go 250*12 & get the answer, but that's my method. I just forgot to finish it

Thanks YorkshireBoy - so there's little difference. Still, a difference is a difference & there may be a rate that beats 3.1% somewhere down the line, which would increase the difference to benefit me. Also i don't have to lock the full whack away from the get go.

Looks like the regular saver approach then.