5% savings loophole on this weeks MSE newsletter

skittles121

In this weeks MSE newsletter under the 5% savings loophole section it says

how you can open the maximum number of TSB 5% current account and Nationwide 5% to get the maximum interest via the step by step method on the 60 seconds guide to 5% savings loophole page.

This method works by depositing the monthly requirement into the account and then depositing that SAME money out a day later via standing order to the next current account.
Now how will you get interest on these accounts if you keep withdrawing the money you just put in? Since most accounts that give you interest calculate it on a daily basis i.e the longer the money is in the account the more interest you gain.

jimjames

No loophole and nothing new in it at all.

Pay money in and take it out BUT keep the right balance in there. Only take full amount out from Halifax. On £1000 you can get equivalent of 12.5% interest doing that with tsb and Halifax accounts. You can even remove it the same day, no need to wait.

You do have to keep a balance in there though to get paid interest so you do need sufficient money to benefit

talexuser

Simple.... an account pays the high interest only on the first £2000 say and requires a £500 payment every month for example. From one of your other accounts you set up a standing order to pay in £500, and on the same day have a standing order to withdraw £500 back to the other account. The balance at the end of the day is still £2000 so the daily interest should not be affected. The more accounts you have the more you can send the same money round different accounts on different days, but in and out out each account on the same day.

skittles121

talexuser wrote: »

Simple.... an account pays the high interest only on the first £2000 say and requires a £500 payment every month for example. From one of your other accounts you set up a standing order to pay in £500, and on the same day have a standing order to withdraw £500 back to the other account. The balance at the end of the day is still £2000 so the daily interest should not be affected.

Hi, thanks for reply. But the tsb 5% account pays interest MONTHLY not daily - this is what i am not understanding.

veryintrigued

jimjames wrote: »

Pay money in and take it out BUT keep the right balance in there. Only take full amount out from Halifax. On £1000 you can get equivalent of 12.5% interest doing that with tsb and Halifax accounts. You can even remove it the same day, no need to wait.

^^^^^^^^Eh?

eskbanker

skittles121 wrote: »

This method works by depositing the monthly requirement into the account and then depositing that SAME money out a day later via standing order to the next current account.
Now how will you get interest on these accounts if you keep withdrawing the money you just put in? Since most accounts that give you interest calculate it on a daily basis i.e the longer the money is in the account the more interest you gain.

To be fair, the actual wording in the piece does make it clear that you need to fund the account before doing the monthly transfers:

just fill the account with the savings up to the limit where you get the high interest, then set up a standing order for the key amount from your bank account each month, then next day use another standing order from savings back to your main bank account

jimjames

veryintrigued wrote: »

^^^^^^^^Eh?

£75 gross from Halifax and £50 from tsb. Total £125 which is 12.5%

eskbanker

skittles121 wrote: »

Hi, thanks for reply. But the tsb 5% account pays interest MONTHLY not daily - this is what i am not understanding.

Interest is calculated/earned on a daily basis, i.e. based on the balance each day, but it's only credited/paid to the account each month.

jimjames

skittles121 wrote: »

Hi, thanks for reply. But the tsb 5% account pays interest MONTHLY not daily - this is what i am not understanding.

I don't really understand the question but the account pays interest monthly based on the balance every day.

innovate

skittles121 wrote: »

Hi, thanks for reply. But the tsb 5% account pays interest MONTHLY not daily - this is what i am not understanding.

it pays monthly but interest gets calculated daily

But you seem to have skipped over the fact that the basic amount (e.g. £2,000) would always stay in the account. After all, it's a 'savings' account.

skittles121

ok gotchya - thanks everyone for replying : )