Are Regular Savers still worth it?

moneyandmountains

With the increase in bank base rate, I have been thinking about whether drip feeding regular savings account is still worth it, or whether it is more trouble than it is worth.

In order to test this, I have done some calculations (please feel free to check the maths).
These are for 1 year fixed rate regular savers.
As a reference, I have taken a standard savings account with 6.2% AER.
Note: I have not combined the standard savings and regular saver rates, as I was only interested in the additional gain.
I have made the following other assumptions.
a)£250 regular saver amount (other amounts should scale up/down)
b) Account funding is from an external savings account, paid by BACS
c) Best case 3 days loss of interest at 6.2% AER, when transferring money from the standard savings account to the regular saver.
d) Best Case 3 days loss of interest on transferring the money out of the regular saver.
(I have taken this as the amount of interest that would be lost if I had kept all the money in the standard savings account for a year, then transferred it out)

[SIZE=2][SIZE=2]No Tax paid
Regular Saver
Rate 6.2% (ref) 6.5% 7% 7.25% 8% 10%
Gain with no £99.82 £104.61 £112.57 £116.55 £128.47 £160.13 
deductions
Difference £0 £4.78 £12.75 £16.73 £28.65 £60.31 
c.f. 6.2%
rate
With deductions £1.77 £9.73 £13.71 £25.63 £57.29 
(c) & (d)
--------------------------------------------------------------------------------------------------------
20% Tax paid
Regular Saver
Rate 6.2% (ref) 6.5% 7% 7.25% 8% 10%
Net Rate 4.96% 5.20% 5.60% 5.80% 6.40% 8.00%
 
Gain with no £80.00 £83.85 £90.24 £93.44 £103.01 £128.47 
deductions
Difference £0 £3.84 £10.24 £13.43 £23.01 £48.47 
c.f. 6.2%
rate
With deductions £1.42 £7.82 £11.01 £20.59 £46.05 
(c) & (d)
---------------------------------------------------------------------------------------------------------
 
40% Tax paid
Regular Saver
Rate 6.2% (ref) 6.5% 7% 7.25% 8% 10%
Net Rate 3.72% 3.90% 4.20% 4.35% 4.80% 6.00%

Gain with no £60.11 £63.00 £67.82 £70.23 £77.44 £96.63 
deductions
Difference £0 £2.89 £7.71 £10.11 £17.33 £36.52 
c.f. 6.2%
rate
With deductions £1.07 £5.89 £8.30 £15.51 £34.70 

(c) & (d)
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Looking at the figures, these assume that the standing orders are perfectly timed (perhaps manually tweaked) so that only 3 days loss of interest occurs.
This makes some of the regular savers look decidedly naff. Certainly, I don't think most people would both with a 6.5% regular saver for a maximum gain of £1.77.

oldfella

this has been discussed before - the general view seems to be that 1 year savers at less than 8% are not worth the effort at current rates

the big benefit is in the 2 year/multi year savers

Mike

moneyandmountains

oldfella wrote: »

this has been discussed before - the general view seems to be that 1 year savers at less than 8% are not worth the effort at current rates

the big benefit is in the 2 year/multi year savers

Mike

Cheers Mike. I hadn't seen that discussion. Only trying to help.
It seems strange that this isn't mentioned as a caveat in the Regular Savings Accounts: The Best Currently Available List! thread, as otherwise people may miss it.

Darth_Calculus

I have been thinking exactly the same thing, moneyandmountains. It seems that as rates are going higher, saving accounts are increasing, but reg savers dont appear to be doing so, as much.

For example, a year or so ago, I had three reg savers, A&L 10% Portman ISA 8%, and Halifax 7%. At that time, the best normal savings accounts were only about 5.00%.

Nowadays, savings accounts are at 6.2%, but the best reg savers dont seem to have increased all that much, as they are still at 7-8%.

Also, with Interest Rates going up every few months, a competitive reg saver at the begining of a year, can become decidedly average by the middle of the year, as normal savings accounts catch up.

I do agree with oldfella about the multi year reg savers, however what I would really like is for there to be a reg saver where you could put in more than £500 per month. I find it a pain having ten or so different savings accounts open at the same time, just to be able to get a decent rate of interest.

In an ideal world, I would just have 3 - ISA, Main savings, Reg saver.

Who?_What?_Where?

moneyandmountains wrote: »

It seems strange that this isn't mentioned as a caveat in the Regular Savings Accounts: The Best Currently Available List! thread, as otherwise people may miss it.

Good point. As a newbie (in the world of money matters and financial products generally actually), I am finding this particular topic very hard to follow as there is so much information all over the place.

This particular question is an excellent example, as well as the various pros and cons associated with particular accounts or combinations (eg. security concerns or particularly effective drip-feeds).

Kazaa's comprehensive ISA sticky really helped me get to grips with those, maybe someone could do something similar (or even a guide could be written) for savings/regular savings account combinations?

Please excuse my brazen demands for other people to do work, and thanks to everyone out there who post loads and loads (and loads) of such great info!

moneyandmountains

Who?_What?_Where? wrote: »

Kazaa's comprehensive ISA sticky really helped me get to grips with those, maybe someone could do something similar (or even a guide could be written) for savings/regular savings account combinations?

That's what I was thinking. I had to resist the temptation to open a new regular saver yesterday, as my tax status will change in a few months.

Who?_What?_Where?

moneyandmountains wrote: »

That's what I was thinking.

Great minds moneyandmountains, great minds.

moneyandmountains wrote: »

I had to resist the temptation to open a new regular saver yesterday, as my tax status will change in a few months.

And Lordy knows what will happen with rates over the next month.

ukdutypaid

Who?_What?_Where? wrote: »

Good point. As a newbie (in the world of money matters and financial products generally actually), I am finding this particular topic very hard to follow as there is so much information all over the place.

This particular question is an excellent example, as well as the various pros and cons associated with particular accounts or combinations (eg. security concerns or particularly effective drip-feeds).

Kazaa's comprehensive ISA sticky really helped me get to grips with those, maybe someone could do something similar (or even a guide could be written) for savings/regular savings account combinations?

Please excuse my brazen demands for other people to do work, and thanks to everyone out there who post loads and loads (and loads) of such great info!

Regular Savings Accounts: The Best Currently Available List

Who?_What?_Where?

It's true that the post mentioned is an excellent guide to Regular Savers. However -

1. Although it does refer to the issue, it does not specifically look at the best feeder accounts. SS2 did say something about incorporating this info at some point - which would be fantastic - but there weren't a lot of responses to this.

2. At the moment important issues that don't fit in 100% with Best Currently Available Lists (ie. whether regular savers are still worth it), don't seem to come up there. Maybe this, and the above point, will change if and when it becomes a sticky?

I PM'd Kazza and he concurred. He and others are also curious as to why SS2's thread has not been stickied, and as to why Kazza's own thread has been recently unstickied.

What's this forum's policy on bumping? If it's not against etiquette, maybe that's a solution?

Just to say, I am definately not disrespecting the hard work that has been clearly been put into the post in question, or indeed the whole of the Savings and Investment board. :T I just thought that as lots of people are looking into the feeder/regular savers system together, it makes sense to tie these up in one place too. :money:

exel1966

The YBS regular saver, even though only at 7% (rise pending hopefully) is particularly good as it carries no time limit and allows up to £20K to be saved.

Jonbvn

exel1966 wrote: »

The YBS regular saver, even though only at 7% (rise pending hopefully) is particularly good as it carries no time limit and allows up to £20K to be saved.

If YBS increase the rate for their RS I think we will have to take the plunge (in OH's name for tax purposes;) ).