5% Savings Loophole

Paully232000

craigfunkulus wrote: »

Does the interest get calculated based on how much money you have in the account all month or is it simply based on how much total has been transferred in?
So if I put £1000 into the Nationwide FD account on day 1 and transferred it back out on day 2 at the start of the next month I would get £50 credit, or would I only get a percentage of that?

You would get, at most, one days worth of interest, 5/356

The Nationwide says this and it is comfusing finance mumbo-jumbo to me;

How we pay interest: On the last day of each month we calculate the interest you've earned each day of that month and then pay you this interest on the 1st day of the next month. We normally pay you this interest 'net' of any tax, which means we deduct any tax due and pass it to the government for you.


Followup question, if I would get the interest based on the total paid in can I put the same £1000 back in to get £2000 and then £500 again to make up the total limit? I assume I would need to leave at least £1 in it but I would acheive that with the interest.

no, based on my above answer

Thanks in advance!

Hopefully I'll be going to open about 5 bank accounts tomorrow!

do you have enough money to open the 5 bank accounts to make the most of the limits, ie £5K for lloyds, £2K TSB etc

Eco_Miser

craigfunkulus wrote: »

Does the interest get calculated based on how much money you have in the account all month or is it simply based on how much total has been transferred in?
So if I put £1000 into the Nationwide FD account on day 1 and transferred it back out on day 2 at the start of the next month I would get £50 credit, or would I only get a percentage of that?

The only account that works anything like that is the Halifax Reward Current Account, which doesn't need the money to stay in the account, but only pays a flat rate £5 per month.

craigfunkulus wrote: »

The Nationwide says this and it is comfusing finance mumbo-jumbo to me;

How we pay interest: On the last day of each month we calculate the interest you've earned each day of that month and then pay you this interest on the 1st day of the next month. We normally pay you this interest 'net' of any tax, which means we deduct any tax due and pass it to the government for you.

I've bolded the important part above. The calculation is based on the balance at the end of each day.

craigfunkulus wrote: »

Followup question, if I would get the interest based on the total paid in can I put the same £1000 back in to get £2000 and then £500 again to make up the total limit? I assume I would need to leave at least £1 in it but I would acheive that with the interest.

Thanks in advance!

Hopefully I'll be going to open about 5 bank accounts tomorrow!

That's not how it works at all.

MrMoore

Are u sure u got it right Martin? If you do not pay in the £500 a month and have tow active direct debits I think you will still get the 3% interest but minus the £2 fee = 2.9%. The other criteria is for cash back only I reckon.

eskbanker

MrMoore wrote: »

Are u sure u got it right Martin? If you do not pay in the £500 a month and have tow active direct debits I think you will still get the 3% interest but minus the £2 fee = 2.9%. The other criteria is for cash back only I reckon.

Tell you what, why don't you put your money where your mouth is and stick some cash into a Santander 1-2-3 account without satisfying those published eligibility criteria for interest and see how you get on? Come back and tell us (including 'Martin') all about it....

YorkshireBoy

MrMoore wrote: »

Are u sure u got it right Martin? If you do not pay in the £500 a month and have tow active direct debits I think you will still get the 3% interest but minus the £2 fee = 2.9%. The other criteria is for cash back only I reckon.

Assuming you're referring to the Santander 1-2-3 account, which bit of...

To get cashback on your household bills and interest on your balance, just follow these steps:

• Pay a monthly account fee of £2.
• Fund the account with £500 a month (excludes internal transfers). A minimum balance of £1,000 is needed to receive interest.
• Set up at least 2 Direct Debits. You'll get monthly cashback on selected household bills you pay by Direct Debit

http://www.santander.co.uk/uk/current-accounts/123-current-account

...are you having difficulty with?

Archi_Bald

In addition, the Santander 123 Key Facts document (downloads as PDF) states quite explicitly:

Section 5
Eligibility for cashback and interest
Pay in at least £500 a month (see Condition 4)
Have at least two active Direct Debits
Pay the £2 monthly Current Account fee
For earning credit interest only, have a minimum current account balance of at least £1,000

Section 5.1
Interest will not be paid for any month where you fail to meet the eligibility requirements as detailed in Section 5.

Eco_Miser

Possibly MrMoore read that as

For earning credit interest, only have a minimum current account balance of at least £1,000

? Punctuation.

inittogether

Just done this for my wife and her redundancy money (thanks HMRC!). Only used the accounts that don't need direct debits to go out as I pay all the bills. My question is about the standing order set up. Is it really necessary to have a day between each one?

I've set them up like that but some days inevitably hit a weekend then there's a disparity with how the banks pay them out. One has gone on the weekend when I didn't expect it to, on the Sunday. It then overtook the one due for the Saturday as that one did not move until the Monday.

But...can't you just do them all for the same date of each month? 7 accounts, all to the max of the interest rate. If £1000 moves from 1 to 2, 2 to 3, 3 to 4...7 to 1 all on the same day, won't you have met your responsibility to make the minimum payments all at the same time? Just feels simpler.

bsms1147

Yep, arguably simpler to do them on the same day (so long as there are sufficient funds at each step).

inittogether

bsms1147 wrote: »

Yep, arguably simpler to do them on the same day (so long as there are sufficient funds at each step).

Thanks for that. I'll see how difficult it is to change the standing order dates now. Should be simple. March will be her first full month using all the accounts. I've calculated around £72 per month for her. Let's see how close I am!

She'll be a non taxpayer from April 6. Can't see a way to inform the banks online, a tick box declaration would be nice. Looks like we'll have to post the R85s.