AER Interest Rate for Halifax Reward Current Account?

Suzkin

Hi,

Just wondering what the interest rate is for the Halifax Reward Current Account that pays a fixed £5 net (or £6.50 gross) every month when £1k is deposited? (I want to make a comparison of this account to others etc.)

Also wondering whether the calculation/maths is in fact possible - I've not seen it displayed anywhere, and I'm unable to figure it out!

Thanks.

chr.istine

I don't think there is any interest on this account.. just a fixed reward of £5 (nett) every month.

Suzkin

If someone puts £1k in the account, for every month they do this, they get £5 net (if a taxpayer). Over a year, they could therefore get £60 reward.

How would this figure effectively translate into an interest rate? (if the maths is at all possible).

opinions4u

Suzkin wrote: »

If someone puts £1k in the account, for every month they do this, they get £5 net (if a taxpayer). Over a year, they could therefore get £60 reward.

How would this figure effectively translate into an interest rate? (if the maths is at all possible).

If you had an average balance of £1,000 all year round and met the funding requirement the rate would equate to 7.5% gross, slightly more as an AER due to being added monthly.

Average balance of £100 and 75% gross comes in to play.

£1 and 7500% gross.

In other words it depends on how each individual runs their account. And as it isn't interest they don't have to quote an AER. Which, technically, makes the AER 0%.

ctdctd

Suzkin wrote: »

If someone puts £1k in the account, for every month they do this, they get £5 net (if a taxpayer). Over a year, they could therefore get £60 reward.

How would this figure effectively translate into an interest rate? (if the maths is at all possible).

Depends on the balance in the account.

So for example.
Put £1K into account each month and leave it there - effective interest about 0.34% gross per annum.
(£75 gross for £12,000 invested over the course of a year)

Put £1K into account each month and leave it there for a day, then withdraw it - effective interest about 228% per annum.
(£75 gross for £1,000 invested for 12 days)

HTH

Newly_retired

chr.istine wrote: »

I don't think there is any interest on this account.. just a fixed reward of £5 (nett) every month.

Well I have a tax certificate for it and have declared it on my self assessment as savings income ( it's already taxed when we get it.)

oldfella

as far as HMRC are concerned its interest, and as its paid net, you can claim back the tax if you dont pay tax

noh

As far as HMRC are concerned the Reward payments are not interest but are taxed in the same way as interest. Hence the inability to use an R85 to get them paid gross.
They are classed as "Annual Payments" that result from a legal obligation.

This link to HMRC manuals may be of interest
http://www.hmrc.gov.uk/manuals/saimmanual/saim8010.htm

Link to a previous thread on the subject
https://forums.moneysavingexpert.com/discussion/3045644

noh

ctdctd wrote: »

Depends on the balance in the account.

So for example.
Put £1K into account each month and leave it there - effective interest about 0.34% gross per annum.
(£75 gross for £12,000 invested over the course of a year)

Put £1K into account each month and leave it there for a day, then withdraw it - effective interest about 228% per annum.
(£75 gross for £1,000 invested for 12 days)

HTH

Or if you do as I do and use £1000 from an overdraft facility on a Halifax current account and cycle it through 3 Reward accounts the effective interest rate is infinite as I have used none of my own money.

Suzkin

Thank you everyone -especially Opinions4u and ctdctd.

kidmugsy

If you make it part of a whirligig with a couple of LTSB Vantage current accounts, it would add up to a wonderful return on money that's on instant access by e-, cheque, and ATM.