MSE News: Savvy MoneySaver plays bank system to make £1,000s

"A retired headteacher makes hundreds of pounds each year by switching his savings and using cashback credit cards..."
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Savvy MoneySaver plays bank system to make £1,000s

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  • edited 1 May 2013 at 1:39PM
    grumblergrumbler Forumite
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    edited 1 May 2013 at 1:39PM
    The calculations are flawed obviously.
    Earning interest on his money is not the same as making money. At least he has to make correction on the interest he would have earned passively in some other place (or on inflation) and it's incorrect to assume that this other place pays 0%, although such places do exist.

    IMHO, MSE news start reminding tabloids news. I don't see how a few switching bonuses and £100-£200 cashback can make £1000s
    We are born naked, wet and hungry...Then things get worse. :(

    .withdrawal, NOT withdrawel ..bear with me, NOT bare with me
    .definitely, NOT definately ......separate, NOT seperate
    should have, NOT should of
    .....guaranteed, NOT guarenteed
  • parknookparknook Forumite
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    I've often wondered about these "get xx% interest if you pay in £xxxx per month".

    let's pretend we have 5 banks that allow 3% interest on balances upto £2,000, if you pay in £1000 a month and you have a spare £10,000 (lucky I know).

    You spread the £10k between the 5 banks and then setup a revolving account transfer so that you transfer £1,000 from A to B, B to C, C to D, D to E and finally E back to A - all on different dates. Technically you are paying in £1000 a month to each account.

    Would this work or have the banks cottoned onto this one?
  • ReaperReaper Forumite
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    grumbler wrote: »
    IMHO, MSE news start reminding tabloids news. I don't see how a few switching bonuses and £100-£200 cashback can make £1000s
    I thinks its because he says:
    he's made £500 each year since he retired three years ago
    To a journalist that makes £1,500 over 3 years and you bump that up further to over £2000 so you can use the plural "thousands" by extrapolating into the future.

    Headlines, eh?
  • ReaperReaper Forumite
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    parknook wrote: »
    Would this work or have the banks cottoned onto this one?
    It works as long as the money comes from external accounts, not other accounts with the same bank.
  • JohnRoJohnRo Forumite
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    Poor article,

    the santander mention makes it sound like 1.25% a month.. dream on. Hopefully he realises all the money in there is losing its buying power at the rate of around 2% a year.

    the credit card cash back mention is also a bit of a red herring too, 3% cashback on £100 is a maximum £36 p.a. not bad at all for money you were spending anyway but hardly sensational.

    To "make" thousands in cash back you'd have to be spending six and seven figure sums annually on the capital one card.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
  • grumblergrumbler Forumite
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    JohnRo wrote: »
    the credit card cash back mention is also a bit of a red herring too, 3% cashback on £100 is a maximum £36 p.a. not bad at all for money you were spending anyway but hardly sensational.
    It was Aqua Reward (not available anymore) 3% up to £100, i.e. on up to £3.33K.
    We are born naked, wet and hungry...Then things get worse. :(

    .withdrawal, NOT withdrawel ..bear with me, NOT bare with me
    .definitely, NOT definately ......separate, NOT seperate
    should have, NOT should of
    .....guaranteed, NOT guarenteed
  • edited 1 May 2013 at 2:24PM
    WywthWywth Forumite
    5.1K Posts
    edited 1 May 2013 at 2:24PM
    I don't get it

    Lets ignore the initial £150 from FD as that is just a one off event.

    The FD regular saver would earn about £144 (less tax) if the maximum of £3600 was saved per year
    (although it would earn £288 less tax on the previous year's total savings)

    Halifax reward - pays £60 if he pays £12k into that a year
    (ok so that comes from his FD account)

    Nationwide - would earn a total of £125 per year interest less tax on £2500 savings
    (but he only opened that 2 months ago)

    Santander - 1.25% (less tax)
    Whats the state pension currently? About £100 a week? £5200 a year? so that would earn £32.50 in first year (less tax) but last year savings would earn just over £65

    Aqua - max £100 if he spends over £3300 a year on the card


    So to get £500 he needs to save almost £12k a year, on top of the £12k a year he is depositing into the Halifax account (which can then be used to live on/pay the £3.3k spent on Aqua with)

    And this ignores the interest he could be earning on that money elsewhere.

    It's nice to hear the individual has enough personal pension to live and save £1000s per year and not even tough his state pension which he can also squirell away.

    But if I was that well off when I retired, I don't think I'd go to all that effort to save a few hundred quid a year. (unless I was really bored ;)

    Yes I would have a few of them. e.g. the cashback credit card, but I wouldn't spend any time and effort trying to maximise the earnings.
    And of course, find the cheapest insurance that suiots your needs each year ... but sometimes I think some people get carried away with their money saving activities to the extent it starts to impinge on their quality of life - a quality of life this individual has presumably worked hard all his life to have achieved, based on the amount of cash they now have to play with ;)

    If he's really earning as much as the article infers, then I wouldn't be surprised if he was a higher rate taxpayer, thereby reducing the interest (because of tax) even more.
  • grumblergrumbler Forumite
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    Wywth wrote: »
    I don't get it

    Lets ignore the initial £150 from FD as that is just a one off event.

    The FD regular saver would earn about £144 (less tax) if the maximum of £3600 was saved per year
    (although it would earn £288 less tax on the previous year's total savings)

    Halifax reward - pays £60 if he pays £12k into that a year
    (ok so that comes from his FD account)

    Nationwide - would earn a total of £125 per year interest less tax on £2500 savings
    (but he only opened that 2 months ago)

    Santander - 1.25% (less tax)
    Whats the state pension currently? About £100 a week? £5200 a year? so that would earn £32.50 in first year (less tax) but last year savings would earn just over £65

    Aqua - max £100 if he spends over £3300 a year on the card


    So to get £500 he needs to save almost £12k a year, on top of the £12k a year he is depositing into the Halifax account (which can then be used to live on/pay the £3.3k spent on Aqua with)

    And this ignores the interest he could be earning on that money elsewhere.

    It's nice to hear the individual has enough personal pension to live and save £1000s per year and not even tough his state pension which he can also squirell away.

    But if I was that well off when I retired, I don't think I'd go to all that effort to save a few hundred quid a year. (unless I was really bored ;)

    Yes I would have a few of them. e.g. the cashback credit card, but I wouldn't spend any time and effort trying to maximise the earnings.
    And of course, find the cheapest insurance that suiots your needs each year ... but sometimes I think some people get carried away with their money saving activities to the extent it starts to impinge on their quality of life - a quality of life this individual has presumably worked hard all his life to have achieved, based on the amount of cash they now have to play with ;)

    If he's really earning as much as the article infers, then I wouldn't be surprised if he was a higher rate taxpayer, thereby reducing the interest (because of tax) even more.
    Unless you believe that every retiring person has no savings or I am missing something, your post makes no sense to me.

    His pension has nothing to do with this.
    He doesn't have to earn £1000 to deposit £1000.
    The money deposited to Halifax doesn't have to remain in Halifax.
    He doesn't have to save £12K p.a. and can use his old savings instead.
    ...
    ...
    We are born naked, wet and hungry...Then things get worse. :(

    .withdrawal, NOT withdrawel ..bear with me, NOT bare with me
    .definitely, NOT definately ......separate, NOT seperate
    should have, NOT should of
    .....guaranteed, NOT guarenteed
  • Got to admit I'm a little disappointed reading this article. I thought I'd be reading something amazing I've never thought of before but in fact all he does is the same as what I do!
  • WywthWywth Forumite
    5.1K Posts
    grumbler wrote: »
    Unless you believe that every retiring person has no savings or I am missing something, your post makes no sense to me.

    His pension has nothing to do with this.
    He doesn't have to earn £1000 to deposit £1000.
    The money deposited to Halifax doesn't have to remain in Halifax.
    He doesn't have to save £12K p.a. and can use his old savings instead.
    ...
    ...

    Allow me to explain

    His pension has nothing to do with this.
    The article states his workplace pension is paid into the FD account.
    The article suggests the individual is squirreling away his state pension into the Santander account (perhaps you missed that in my post?)

    He doesn't have to earn £1000 to deposit £1000.
    It has to come from somewhere, although I think I covered in my post where some of the deposits may come from other accounts e.g. the money deposited into the Halifax account coming from the FD account (perhaps you missed that in my post?)

    The money deposited to Halifax doesn't have to remain in Halifax.
    I didn't suggest it did. In fact I said it was probably used to live on/pay off the Aqua card spending with (perhaps you missed that in my post?)

    He doesn't have to save £12K p.a. and can use his old savings instead.
    I think he does have to save about £12k a year (perhaps you missed that in my post?)
    If he's rich enough, he could perhaps be taking that deposited amount from other savings plans such as a stocks & shares ISA that I would have last year expected to have earned about 10% per year (tax free) rather than 1% or 2% a year (less tax)
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