A bit of advice please

benmc_2

I know that i could probably work this out but i have been reading the site all morning and am still unsure.

I have a Halifax Web Saver that says it is paying 5% (it says at the top of my webpage). Is this good? Or is it not actually 5% - i am a little unsure about AER etc. Sorry to ask what some will probably think is a stupid question.

Steve_xx

It's an ok account but it wouldn't set the woods on fire. It is 5% AER. That means that if you left £1 in the account for a full year then it would earn you 5p. Then you would have to pay tax on that at 20% leaving you with 4p for every £1 invested for a whole year.

Better to have an account with ICICI, paying 6.05& AER. That would leave you with 4.84p after deduction of tax for evry £1 invested for a full year.

But, remember that you can invest £3000 in an ISA too. This will allow you to keep all of the interest without the tax (20%) being deducted first.

nilrem_2

Well as that account pays annual interest rather than monthly the AER rate is the same as gross rate in this case 5% or 4% after tax.

Personally I don't think it is very good, Icesave for example will pay you 5.79% (4.63% after tax deducted @20%) and that is with Monthly interest!

Or 5.95% if you have annual interest (4.76% after tax)

BTW yours is not a daft question, the institutions often try to make it complicated so that you can't compare their poor rates! :eek:

benmc_2

Thank you very much Steve. I thought this was the case but was not sure. I don't have a lot to invest and already have an isa so this is just an easy access extra interest type of thing - if that makes sense. I usually spend it each month!

debbie42

benmc wrote: »

Thank you very much Steve. I thought this was the case but was not sure. I don't have a lot to invest and already have an isa so this is just an easy access extra interest type of thing - if that makes sense. I usually spend it each month!

I've just found out about the Halifax high interest current account. It pays 6.17% aer on balances up to £2500, so might be worth switching, depending on your current arrangements. According to CS it's no different to my existing current account, apart from the fact that it pays higher interest and you have to fund it with £1000 p.m. instead of the £500 mine currently needs to avoid charges etc. You need to ask CS to send you a pack to convert existing accounts. I got mine today, so haven't actually done it yet, but I plan to.

http://www.halifax.co.uk/bankaccounts/highinterestcurrentaccount.asp