MSE News: TSB to pay 5% interest on new current account – is it any good?

Aquamania

Could someone explain how the figures in the last column are calculated please? :huh:

(i.e. maximum you can earn per year in interest after basic rate tax)

5% of £2000 is £100, less tax @ 20% = £80 ; yet the figure is £78 (£2 less)

Similarly with the Nationwide (1st year only):
5% of £2500 is £125, less tax @ 20% = £100 ; yet the figure is £98 (£2 less)

Herbalus

Archi_Bald wrote: »

it will be 5% variable. So they could in theory drop it before a year is out.

And I like how they presented the variable part to make it seem advantageous:

Some other banks and building societies may try and tempt customers with a ‘teaser rate’ only to take that rate away after 12 months. TSB doesn’t. It simply gives customers 5% interest.

Though if it lasts more than a year I'll happily be alright with that

I am glad to see the end of this direct debit nonsense though - it's so much easier than setting up savings accounts.

YorkshireBoy

Aquamania wrote: »

Could someone explain

5% is the AER. You can't earn 5%, only the 4.89% gross p.a. rate, because you can't benefit from compounding.


That's the theory...I haven't checked their maths!

Aquamania

WishICouldFindMySlippers wrote: »

Hopefully we'll be allowed more than one of these....

According to a non-MSE article from a link on another thread, it indicated that you would be allowed 2 such accounts.

Savings_Dave

I wonder what will happen to the current Enhance part of the Classic account? Will this continue or will the the new Plus accounts just replace them?

If you can have two then this would be a good place for some savings

rb10

Savings_Dave wrote: »

I wonder what will happen to the current Enhance part of the Classic account? Will this continue or will the the new Plus accounts just replace them?

If you can have two then this would be a good place for some savings

I would guess that the Enhance account will be removed from sale (it wouldn't make sense to have both Enhance and Plus available to new customers at the same time), but will continue for those already with the Enhance account (why would they automatically upgrade everyone on Enhance to a higher rate?).

You can have two - it says so in the TSB press release.

edinburgher

Why oh why oh why must it be so hard to earn a few £s in interest (that's a rhetorical question)

Ah well, I suppose it's another way to squirrel away cash for home improvements/remortgaging etc. that pays more than an ISA.

innovate

It's not really hard, is it, to open a couple more current accounts and to shift £500 about once a month whilst skimming off the interest? Less than an hours work a year, I reckon. Where else do you make £196 for an hour's easy work?

If it is too hard, you have options that require less work and pay less. Entirely your choice.

re08149383

Am I being blind??! As instead of 5% on £2,000, with a £500 deposit per mont, I'm seeing this on £2,500, with £1000 deposit per month.

http://www.tsb.co.uk/legal/current_accounts_legal/plus_important_information.asp

Jogle

re08149383 wrote: »

Am I being blind??! As instead of 5% on £2,000, with a £500 deposit per mont, I'm seeing this on £2,500, with £1000 deposit per month.

http://www.tsb.co.uk/legal/current_accounts_legal/plus_important_information.asp

Yes, I noticed that too. As the account hasn't been officially launched, the linked conditions will change to those set out in the press release