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Ways to Maximise Interest on Savings?
Comments
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Just been considering regular savers....They are only any good if you drip feed them. If you have the funds up-front, they aren't that competitive. A headline 3% equates to 0.25% per month and if you work out the compounded interest on a £100 monthly save, you return £1219.68 at the year's end - which then gets dumped to 0.1% and you need to find another home for it. The real rate is NOT 3% but equivalent to a mere 1.6% - which is easy to beat. If you were able to get 3% on the whole $1200 from day one - you would get £1236 at the end. Sadly 3% accounts are rare... The real issue is that you are paying tax on this - and it's still well below inflation!0
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You mentioned nationwide B2S @ 2% - I assume you mean save to buy. They also offer a regular saver account at 2.5% on up to 1000 per month, which would seem a better bet.0
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Just been considering regular savers....They are only any good if you drip feed them. If you have the funds up-front, they aren't that competitive.
Yes, it's important to bear in mind that this thread is all in the context of OP's remark about not having a lump sum but seeking to get the best deal from saving on a regular basis!
If you're starting from wanting to find a home for a lump sum then yes, that's a different conversation!0 -
Re. OP's 3) and 4) -first direct - if you open an esaver at the same time and put £1 into it, you don't need to cycle the money into it. Just put the £300 into the current account before it gets transferred to the reg saver.0
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Yes, it's important to bear in mind that this thread is all in the context of OP's remark about not having a lump sum but seeking to get the best deal from saving on a regular basis!
If you're starting from wanting to find a home for a lump sum then yes, that's a different conversation!
Absolutely right - but all these saving accounts are short term, and at the end of the year you will have a lump sum to reinvest.0 -
Just been considering regular savers....They are only any good if you drip feed them. If you have the funds up-front, they aren't that competitive. A headline 3% equates to 0.25% per month and if you work out the compounded interest on a £100 monthly save, you return £1219.68 at the year's end - which then gets dumped to 0.1% and you need to find another home for it. The real rate is NOT 3% but equivalent to a mere 1.6% - which is easy to beat. If you were able to get 3% on the whole $1200 from day one - you would get £1236 at the end. Sadly 3% accounts are rare... The real issue is that you are paying tax on this - and it's still well below inflation!
I agree with what you say in full.
Problem is this isn;'t explained to people when they open these accounts so they don't understand the low rate they akchewlee get.It's your money. Except if it's the governments.0 -
Just been considering regular savers....They are only any good if you drip feed them. If you have the funds up-front, they aren't that competitive. A headline 3% equates to 0.25% per month and if you work out the compounded interest on a £100 monthly save, you return £1219.68 at the year's end - which then gets dumped to 0.1% and you need to find another home for it. The real rate is NOT 3% but equivalent to a mere 1.6% - which is easy to beat. If you were able to get 3% on the whole $1200 from day one - you would get £1236 at the end. Sadly 3% accounts are rare... The real issue is that you are paying tax on this - and it's still well below inflation!
I agree with what you say in full.
I don't.
Lets assume you don't pay tax and have a lump sum of £3000.
Your options are:
a) Put it all in a 3% savings account, and get £90 interest (i.e. overall return of 3%); or
b) Drip-feed it from the 3% savings account to a 4% regular saver. You'd get around £40 from the normal savings account and £65 from the regular saver - i.e. a total return of £105, or 3.5%.
So the overall return by drip-feeding into a regular saver is higher than keeping it in a 'normal' account.
The difference is much larger if you have a bigger amount to save, or if the difference between interest rates on your 'normal' and regular savings accounts is wider.Problem is this isn;'t explained to people when they open these accounts so they don't understand the low rate they akchewlee get.
Everywhere I've seen, banks are very clear about how much interest you can expect to earn. See a few examples:Norwich_&_Peterborough wrote:Interest is paid for each full day that your money is deposited in your account. You can put up to £250 in your account the day you open it which will earn a full year’s interest. Each month thereafter you can deposit up to £250 and it will earn interest every day the money is in the account up to the anniversary date when your annual interest is paid.
Eg. Account opened 1 January 2011 with the maximum £250. Interest is earned on this deposit for 365 days (a full year) before the interest is calculated and paid back to the account. If you deposit a further £250 on 1 February, it will earn 334 days interest (February to December) before the interest is calculated and paid back to the account and so on.
You will not receive a full year's worth of interest on the total amount you deposit with us over the 12 month period (maximum £3,000).First_Direct wrote:The interest rate is 6.00% AER/gross fixed for 12 months. So if you saved £300 per month for 12 months, you'd receive returns of approximately £117 gross (£93 net) in interest after 12 months. Interest is calculated daily and paid on the 12 month anniversary after account opening.Yorkshire_BS wrote:Interest rates are variable, paid annually. £100 per month saved at 3.00% gross p.a./AER (rate including conditional bonus) would lead to gross interest of £19.58 at the end of the 12 month period0 -
rb10, it's still confusing because many people see the 6% or whatever then see the actual return which isn't given as a %age.
It's designed to confuse.
Not everyone is money savy or reads MSE.It's your money. Except if it's the governments.0 -
rb10, it's still confusing because many people see the 6% or whatever then see the actual return which isn't given as a %age.
It's designed to confuse.
Not everyone is money savy or reads MSE.
I'm still not convinced!
They have to show the 6% (or whatever), as that's the interest rate they are paying!
Is there any better way around it?0
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