First Direct Regular Saver account question

AFK_Matrix

I have been looking at the First Direct regular saver at 8% and in the information it says I would get roughly £156 in interest if I saved £3600 over the year.

Now I don't know if I am doing something wrong but when I use several different calculators and put in 3600 and 8% I get £288 as the amount of interest.

So why are the calculator results so much more than what FD are saying?

reehsetin

Tax on the interest maybe?

Tried to look up what I got last year but it doesn't show that info online annoyingly

HeadAboveWater

Accumulative? They say 'save from a minimum of £25 up to a maximum of £300 each month' on their website. Month 1 you'll have £300 saved, month 2 £600 etc etc. It's only by month 12 you'll have the full £3600 total saved.

Really dunno how those things work so don't quote me on that!! :rotfl:

Not tax... 'you'd receive returns of approximately £156 gross (£124 net) in interest after 12 months'

thumshie

You don't have £3600 in the account for all 12 months.

1st month £300
2nd month £600
3rd month £900
..
..
12 month £3600

someone else will give you a link to a better explanation of regular savers soon....

innovate

AFK_Matrix wrote: »

I have been looking at the First Direct regular saver at 8% and in the information it says I would get roughly £156 in interest if I saved £3600 over the year.

£156ish is the gross figure, for someone who pays no tax (it's actually £154.17).

Use this calc to figure out returns for tax payers.

AFK_Matrix

Ahh yeah it makes sense now and I found a calculator and it does come out at roughly 124 net. Thanks again.

MarkFromCornwall

AFK_Matrix wrote: »

Now I don't know if I am doing something wrong but when I use several different calculators and put in 3600 and 8% I get £288 as the amount of interest.

Your £3600 won't be in the account for a year because you will be paying it in gradually. As a rough estimate, the average account balance will be £3600 ÷ 2 = £1800 and 8% of £1800 is £144 so it's roughly right (the difference will have to do with the dates of payments).

cte1111

The total gross interest received will indeed be £156:

1 3600 24
2 3300 22
3 3000 20
4 2700 18
5 2400 16
6 2100 14
7 1800 12
8 1500 10
9 1200 8
10 900 6
11 600 4
12 300 2

156

There will be 12 months with £300 in the bank, 11 months with £600 etc. The third column is the interest for that month.

YorkshireBoy

1st payment is in there for 12/12ths of a year
2nd for 11/12ths

and so on until the last payment is in for 1/12th of a year

So you have:

12/12 + 11/12 + 10/12 + .......2/12 + 1/12

Adding all these up you have 78/12, or 6.5

You need to use this 6.5 multiplier in your interest calculation as follows:

£3,600 x 8% / 12 x 6.5 x 0.8 = £124.80

where 0.8 is the basic rate tax multiplier

HeadAboveWater

Very helpful thank you. Although it makes nooooooooo sense to me at all...

dakkan

Its very simple.. you need to calculate like this...


You pay in say maximum amount per month = £300

now 8% interest is for a year so you need to divide by 12 for each month.

8 % of £300 = £24 for a year
= £2 for that month (£24/12 = 2)

for 1st month you will get £2

Second month 8% of £600 = 48 for year
= £4 for that month (48/12)

Third month 8% of £900 = £72 for year
= £6 for that month (72/12)

Keep adding it for 12 months like this
2+ 4+6+8+10+12+14+16+18+20+22+24 = £156

Hope its clear..