Regular Saver Actual (Not Headline) Interest Rate

guymo

Hmmm, I am really not sure what the question meant or why the claimed answers are the answers, or why the information on the FD web site

"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"

is not good enough to answer this question.

Since they calculate interest daily, the actual amount you'll get on a monthly deposit of a fixed amount depends on when in the year you start! If your first contribution is on Feb 1st then the second goes in 28 days later, so the pot grows more quickly than if you start on 1st July, for instance. Ha.

YorkshireBoy

ChopperST wrote: »

My question was how to calculate the interest rate and the precise formula for doing so - nothing to do with the interest payment. But thanks for your reply, hope you feel better for that earned after 12 months.

...is how I read your question.


In case you're wondering where the 6.5 figure quoted earlier is derived from, its...


1st payment in for 12/12ths of a year
2nd for 11/12ths of a year
.
.
.
11th payment in for 2/12ths
12th payment on for 1/12th


So 1/12 + 2/12.....+ 11/12 + 12/12 = 78/12 = 6.5


As another poster said, the exact amount depends on when you start...but the above will be pennies out, that's all.

ChopperST

You've read the question correctly.

Thanks again for your helpful replies.

Milarky

Strangely First Direct usually comes straight out and says what amount of interest will be paid (assuming all payments were for the £300 maximum): £117 gross. And, indeed, more and more of these regular saver providers do the same thing: state the (maximum) amount of interest payable on their regular savers after 12 months. That's helpful for most 'in a hurry' types, isn't it?

But they won't do what the poster is asking for: say that the amount received would therefore be '3.25%' of the total paid in. To do so would just lead some people to (erroneously) think that the interest rate on the account wasn't 6% when it's 6%