Regularly Beat the Best Savings Account Rates Discussion Area

derbyjon

Just to clear up an issue regarding conversion of interest rates to monthly/weekly/daily rates.

A 6% AER is not 0.5% per month due to the compound nature of the interest.

Instead you should use 10^(log (annualrate) / number of periods)
Where annualrate is expressed in decimal form (6%=1.06)

e.g. For 6% converted into a monthly rate:
log(1.06) = 0.025305865
0.025305865 / 12 = 0.002108822
10^0.002108822 = 1.004867551 = 0.487% to 3 significant figures

derbyjon

Regarding drip-feeding I've cobbled together a spreadsheet to look at the difference between £6000 sitting in a 6% AER account and drip-feeding across to a 7% AER account at £500/month.

As you might expect after one year, the £6000 in the 6% account has grown to £6360, a gain of 6%.

The drip-fed scenario has £165.95 left in the 6% account and £6221.45 in the 7% account. This gives a total of £6387.40 or 6.46%. Whether the effort is worth the extra £27.40 is for you to decide, although assuming the term isn't limited then the following years will attract the benefit of the full 1% difference between the accounts.

For the drip-fed account I assumed that 4 days interest was lost during each bank transfer. All calculations used daily interest.

Mikey787878

Okay - i've recently inherited £56000 following my Dad's death - i want to make sure I invest this wisely and safely to do the right thing by him and sort out my future.

Can invest for up to 2 years but in 2 years due to job am likely to be moving back up north and probably buying a house so will need the cash at that point.

Plans are: (don't worry will get to "regular savings" question in a min...)
-Use £8000 to pay existing credit cards and personal loans off
-don't pay off old fashioned type student loan

That leaves me with £48000.
-Put £6000 into cash isa (£3000 pre april, £3000 post april etc)
=42000 left over

So i was going to stick the 42000 in a savings account (was looking at A&L just because am about to move my current account (from HSBC) and isa to them and they have the 12% regular saver account - i know A&L drawback is needing to review everything in May 2009 but reviewing once a year is no prob to me)

ALSO as i'll have paid off most debts i will now have an extra £200 montly surplus from my salary that i was looking to put away each month into a regular saving account. But having read all this i'm very confused.

Should i be transfering this money each month direct to A&L's regular saver? (12%) OR should i actually be transferring this £200pm into my A&L esaver account and then be moving £200 from that acc accross to the regular saver? (And if so why - i don't understand that!)

OR should i be seeking to transfer the max i can each month out of the saver account into the regular saver anyway? (don't know what the monthly limit is, but say it's £500 a month max, should i be transferring my £200 from my salary surplus into the regular saver plus £300 from my esaver? (to make total of £500?) thereby reducing the balance in my esaver?

I am very confused.............. Any help very much appreciated.

(For info the current account will have 8.5% interest for comparison tho only up to balances of 3000.)

Advice needed please

cornerstone13

Mikey - the A&L regular saver only allows up to £250 per month AND you have to have a current account with them into which you have to pay £500 minimum each month (but it doesn't have to stay there).

Most regular saver accounts only allow a max of £250 per month - we have A&L, Nationwide, Leek BS and Brittania BS - the latter three are quite straightforward and capped at £250 per month. we chose the two BS as they are fixed over a year at 7.5%, but they also tie our money up for a year. We use monthly income to save in these accounts, which you could do with your spare £200 each month.

You may be better to put the lump sum in somewhere like ICICI which is paying 6.41% at the moment; they also have a HiSave Term Deposit which is paying 6.86% on a six month or one year term. You can 'drip' money out of ICICI into the regular savings accounts, but you'd have to do this via a linked account (have a look at the ICICI site for how it operates).

If you don't mind 'risking' some of the lump sum, you could put £7k in a maxi ISA now and £7,200 in a new one after April, but these are affected by the stock market

Hope this helps - all I can say is read as much as you can get hold of, weekend newspapers often have comparison tables and of course, plenty of info on this site.

Good luck

craigbruce123

I have just looked at the Llyods TSB website and have come across a shocking discovery. Their Monthly Saver account has had it's interest rate dropped from 8% to 4.55% am i reading this right! if so it needs updating on the Regularly Savings Web Page.
Spread the word to all money savers!!
I have money in this account which i opened when the rate was at 8% , I am making the assumption that i have now lost this rate .
Any Thoughts?

Paul_Herring

It changed Monday 3rd March - being discussed here: http://forums.moneysavingexpert.com/showthread.html?t=780793

knights

craigbruce123 wrote: »

I have just looked at the Llyods TSB website and have come across a shocking discovery. Their Monthly Saver account has had it's interest rate dropped from 8% to 4.55% am i reading this right! if so it needs updating on the Regularly Savings Web Page.
Spread the word to all money savers!!
I have money in this account which i opened when the rate was at 8% , I am making the assumption that i have now lost this rate .
Any Thoughts?

I think you will find that your account is fixed at 8% until maturity.

The 4.55% applies to NEW regular savers, which at that rate will be few and far between I suspect !!

regards

Megalomaniac

I am thinking of opening the Abbey Fixed Rate Monthly Saver and on the standing order part of the form it asks for my bank address. I want to set up funding from my ICICI hi-save account so what address should I put down? Thanks

Paul_Herring

I'm not sure that ICICI will allow standing orders out of their account, since they only allow one linked account to which you can transfer money.

Megalomaniac

Right... I'll do it with my Egg one then and set my Egg Savings Account to be my transfer account with ICICI. Wish you could transfer freely between whatever accounts you wished!