2.5% regular saving v 1.75% standard ISA

StuaH

I can't work out whether it's better to drip feed £5900 (as four and a half instalments of £1250) into Nationwide's 2.5% Regular Saver ISA, or put the same amount money into their £1.75% Flexclusive ISA.

How do I work out the real annual interest rate on the Regular Saver account?

Archi_Bald

The real interest rate of the Nationwide's 2.5% Regular Saver ISA is exactly 2.5% AER.

What you probably are after is the actual return after 12 months - this is a sum of money, not the AER %. You can use this calculator to work out the numbers.

EDIT: you will make a lot more from your £5,900 if you put them into a combination of 2 TSB Plus and 1 Nationwide FlexDirect accounts. You can still tip the lot into an ISA in late March 2015 if one of your objectives is to use some of your ISA allowance for the year.

jimjames

2.5% vs 1.75% vs 5% from.a current account.

I know which I'd choose :beer:

bsms1147

£124 in the 2.5% regular saver ISA vs £103 in the 1.75% one.

As others have said, you could do better via other methods.

StuaH

Thanks guys.

The FlexDirect account only pays 5% whilst I pay in £1000 per month, and I wasn't planning to, after the initial £2500.

jimjames

StuaH wrote: »

Thanks guys.

The FlexDirect account only pays 5% whilst I pay in £1000 per month, and I wasn't planning to, after the initial £2500.

That's entirely your choice but it's a minor effort to get a much better return.

Just setup my 2nd TSB account today so that's another 5% chalked up.

matttye

StuaH wrote: »

Thanks guys.

The FlexDirect account only pays 5% whilst I pay in £1000 per month, and I wasn't planning to, after the initial £2500.

Do you realise you don't need to keep the money in there?

You can pay in £1k and take it out immediately to qualify for the interest that month.

Eg:

Balance £2.5k -> pay in £1k -> withdraw £1k -> interest paid on £2.5k.

MumOf2

The only problem with the interest-bearing current accounts is that they often require 2 direct debits to be paid out each month (so that counts out council tax because that's only 10 months a year). Also the Lloyds Vantage accounts are reducing their interest on 2 July to pretty low rates.


Which means you can't hold much cash in these accounts and get the 4% or so interest. Any extra over and above, say, £5,000 (as with Lloyds Club) earns nothing.


Nottingham Building Society have a 4% ISA regular saver:
£10 - £1,250 a month
Can vary the amount each month
One off opportunity in March 2015 to make it up to (max) £15,000
Open in branch


So as long as you're maxed out with good interest current accounts where possible, you can put the surplus in the ISA. If you did £1,250 each month the interest would be c.£325 at the end of the year. Which is pretty OK considering the flexibility of the T&C. And no direct debits required!!!


MumOf2

jimjames

TSB has no such requirement for DDs and pays 5%.

MumOf2

jimjames wrote: »

TSB has no such requirement for DDs and pays 5%.

Thanks, Jim James. I suppose the other advantage of the ISA is that once it's in it's in and the tax free element (as long as the govt doesn't withdraw it) is there for the years ahead.

bsms1147

Post disapparated