Are Regular Savers still worth it?

robwild

oldfella wrote: »

My approach is to use my stoozing money - so the CC companies are lending me money at 0%, which I use to fund £1500 of regular savers each month from which I earn 8-10% interest.

Mike

Found this thread by accident, most enlightening!

For a number of years I've used upto 7 or 8 RS accounts as the main stay of my monthly savings. I currently pay the maximum amounts into those from Lloyds, Yorkshire BS and the Halifax.

The prospect of using someone elses money intrigues me! How does it work? Which cards are best? I'd welcome some advice. Many thanks.

Kazza242

robwild wrote: »

The prospect of using someone elses money intrigues me! How does it work? Which cards are best? I'd welcome some advice. Many thanks.

Check out the Stoozing board on this forum, which will give you lots of info on getting money from credit cards. Here is the link.

Also check out the website: http://www.stoozing.com.

Special_Saver2

With a number of new 12 month regular savers appearing (and all my spare cash already going into regular savings accounts), I have had to think about how much it is worth going to the effort of opening a new account compared to just putting a lump sum in a good savings account. We have already discussed this in this thread before but I wanted to check whether you think my calculation method below is correct.

Drip Feeding - Is it worth it for me?

A = gross interest earned from the 12 month regular savings account
B = gross interest earned from the drip-feeding account
C = interest lost transferring money from feeder account to regular savings account
D = interest lost closing regular savings account and transferring to another account
E = gross interest earned from leaving the lump sum in the best savings account or bond

Gross interest gained using drip-feeding and regular saver = A + B - C - D - E

Net interest gained = gross interest (above) x 1.0 for non-taxpayers
Net interest gained = gross interest (above) x 0.8 for basic rate taxpayers
Net interest gained = gross interest (above) x 0.6 for higher rate taxpayers

Here is a worked example:
Your favourite relative gives you £3,000 for Christmas. (This feels like drawing a Chance card in a game of Monopoly!) You think about simply paying the money into the best savings account, e.g. Alliance & Leicester eSaver paying 6.50% gross AER. You could then leave the money there without any fuss. You also think about opening a Skipton Special Saver account paying 7.55% gross p.a. into which you can pay £250 per month. You will deposit the lump sum in a Sainsbury's Regular Savings account and use it to drip feed the money into the Skipton account. This option involves a bit of hassle - you need to open an extra account, transfer the money manually each month (and time it carefully to avoid losing interest with money in transit over a weekend) and then close the Skipton account at the end of the year. Is it worth it?

A = gross interest earned from the 12 month regular savings account
= average balance over the year x interest rate = £1,500 x 7.55% = £113.25

B = gross interest earned from the drip-feeding account
= average balance over the year x interest rate = £1,500 x 6.25% = £93.75

C = interest lost transferring money from feeder account to regular savings account
= 3 / 365 (3 working days interest lost per transfer) x 12 payments x £250 each x 6.50% (interest rate) = £1.60
(For the interest rate, you could equally well use 6.25% or 7.55% or an average of these.)

D = interest lost closing regular savings account and transferring to another account
= 3 / 365 (3 working days interest lost) x £3,000 (closing balance) x 6.50% (interest rate) = £1.60
(To keep the calculation nice and simple, I have not tried to factor in the interest that would be added to the closing balance - it will not make a huge difference.)

E = gross interest earned from leaving the lump sum in the best savings account or bond
= £3,000 (lump sum) x 6.50% AER interest = £195.00

Gross interest gained using drip-feeding and regular saver = A + B - C - D - E = £8.80

Net interest gained = gross interest (above) x 1.0 for non-taxpayers = £8.80
Net interest gained = gross interest (above) x 0.8 for basic rate taxpayers = £7.04
Net interest gained = gross interest (above) x 0.6 for higher rate taxpayers = £5.28

So, you could look at the amount of money you personally would make over and above just leaving the money in a savings account and decide whether you feel it is worthwhile or not.

With the current Skipton Special Saver though, you could open 3 accounts and a Christmas saver (total of 4 accounts) and potentially make 4 times the amount calculated above, which might make it more worth your while!

Milarky

Whenever I do these sums I use the '6.5/5.5' split instead of 50:50 since all regular savers I am aware either stipulate this (eg A&L) or allow it. Yes you can open a regular saver with a nil balance (Abbey) and then add to it only mid-month but that rather defeats the purpose of squeezing as much time as possible into the regular saver at the expense of the feeder account(s)

I also allow '0.1' months on average for the time between accounts but I don't make allowance for time lost on getting the cash out as perhaps I should.

Anyway, your example would then become

A+B-C = £3000 x ( 7.55% x [78-1.2] + 6.25% x [66] ) /144 = £206.73

So the gain stands at about 11.73 gross

When same day payments happen the '1.2' will drop out and the gain will go up a bit more - to 13.63 gross

[These will arrive around 'mid year' in practice so split the difference and call it a gain of about £12.70?]

EXPEDITE74

Please Can someone help,

Sorry for being a newbie numbskull(lol)

I would like to Save £500.00 per month for 5 x years

Could someone please tell me What would be the best savings account to get

Fixed rate or ?????

And after 5 x years of saving this amount what would I earn with interest added on please??????

Again I apologise for being a numpty but I can't understand the terminology of the interest rates, AER etc etc it confuses me!!!!

Thanks

Liz_the_Whizz

Expedite,

Have a look at MSE's savings calculator.

http://www.moneysavingexpert.com/savings/savings-accounts-best-interest#saving

What you can't know exactly of course is what interest rate you will get over 5 years, so you will have to take a guess.

I personally would NOT go for a 5 year fixed rate as who knows what will happen to interest rates in the future. Though if you have a lump sum to put away now, I would lock it into a 1 year fixed-term bond (eg with Icesave @ 6.7%) asap.

If you are looking at regular savers, they tend to be variable rate anyway.