Nationwide FlexDirect - 5% interest, free overdraft

apt

grumbler wrote: »

Yes.

Yes, provided that your total transfers into ISA during the year remain below £5640

However, 5% after basic tax is 4.2%, not 3.9%.
.

5% is 4% after basic rate tax.

elantan

yep i am aware of that thanks for the reminder though , i wont be making any transfers into the i.s.a until i have a steady amount of £2500 into the flexdirect account, once that has been achieved ( if that has been achieved) i will start building up the i.s.a account with no intention of withdrawing any of it unless an emergency happens... i am thinking at the end of the year transferring the £1880 ( or whatever is left after paying for my holiday) into the i.s.a and hopefully maybe reaching £3k which would be a good start to having some savings

thanks for the advice

elantan

apt wrote: »

5% is 4% after basic rate tax.

i must be working it out wrong them how do i work out the correct % ? i worked it out as

4.89% ( as that was the gross that was on my letter it was 5% aer) divided by 100 multiply by 20 divided by 1 which gave me a total of 0.978 i then took 0.978 away from 4.89 which gave me the final answer of 3.912%

Hominu

elantan wrote: »

i must be working it out wrong them how do i work out the correct % ? i worked it out as

It's far easier to say 5% * 0.80 = 4%

grumbler

elantan wrote: »

i must be working it out wrong them how do i work out the correct % ? i worked it out as

4.89% ( as that was the gross that was on my letter it was 5% aer) divided by 100 multiply by 20 divided by 1 which gave me a total of 0.978 i then took 0.978 away from 4.89 which gave me the final answer of 3.912%

4.89% is the gross rate without compounding.
(1+5%)^(1/12)-1=0.407% - monthly gross rate that you can calculate in a simpler way by dividing 4.89% / 12

To calculate the net rate just multiply the gross rate by 0.8.

opinions4u

The gross rate is the contractual rate. 4.89%. AER takes in to account interest on interest within the year assuming gross interest is actually paid.

The net monthly rate is (4.89 x 0.8) / 12 = 0.326%. Compounded 12 times this comes out at 3.9829%. This is the return you'll get if basic rate tax is deducted and all interest added is left in the account to compound at that rate.

AMG762

Hi, sorry for sounding a bit dumb, but what is the best way to maximise the benefit from this account?

Would i have to leave a 2.5k balance and then cycle an extra 1k in and back out of the account?

Or could it be done using a smaller balance?

plunt

keep it at 2.5k the entire month, all month and transfer 1k from another account (for example a lloyds vantage account ) as soon as its there transfer it back. do this every month

for smiplicity,

get a vantage account with lloyds (or santander 123 account)

have 4k in either of them, and have 2.5k in this nationwide account

set up a standing order from the lloyds or santander account for 1k to the nationwide account

and set up a standing order from the nationwide account to the lloyds/santander account for the same date

means earning 3% with santander/lloyds
and 5% on nationwide.

and fill the criteria for both of them!

CindyT

Am I right in thinking that if you don't pay in a full £1000 a month you won't get the interest on the positive balance, but you would still get any agreed overdraft for free (as in not pay the 50p/day charge) for 12 months?

Seems too good to be true... lol

Thanks for the help in advance!

plunt

yep thats what i have read!