5% Savings Loophole

xylophone

It's not interest but if you want the Co-op Reward you need to log in once a month

greenglide

o earn interest (which is paid monthly) just pay in a minimum of £500 a month and register for Internet Banking, Paperless Statements and Paperless Correspondence. It's important that you log in regularly, at least once every 12 months.

If you don't log in to Internet Banking within 12 months, we might have to turn off your paperless correspondence, which will mean you won't get your interest. We don't want that to happen, so please log in regularly.

See here http://www.tsb.co.uk/current-accounts/classic-plus-account/

It isn't as prescriptive as on the letter they send me about the new terms when the interest rates changed which was

The way you earn interest on your account stays the same. You still need to pay in a minimum of £500 a month and be registered for Internet Banking, paperless statements and paperless correspondence. You also need to make sure you log into your Internet Banking at least once every 12 months. And if you have a joint account, both of you must log in.

Depends on the severity of "need to", I read it as "must"!

AR2012

I’ve mocked up what 50K in savings can get a single person. Around £1140 – tax (including two Tesco’s current accounts) you will need £1514 to £1519 (Santander 123 charges £5 monthly) per month to move between accounts and two direct debits per account. Two Tesco’s savings accounts can facilitate this. This is just for the direct debit and standing orders required for the loophole to work. Max out these accounts then max out the ISA/ Savings accounts (dependant on the % offered).

KTF

You could add a second TSB account and the 2x Tesco current accounts to that list as well - the newer Tesco accounts have more hoops to jump through now though.

Plus you could have the Nationwide/HSBC/FD/M&S Regular savers at 5% on top.

Eco_Miser

AR2012 wrote: »

I’ve mocked up what 50K in savings can get a single person. Around £1140 – tax (including two Tesco’s current accounts) you will need £1514 to £1519 (Santander 123 charges £5 monthly) per month to move between accounts and two direct debits per account.

Since the accounts are receiving monthly interest, you don't need the extra £19 to feed the direct debits or Santander's charge. You don't need the generic current account you've marked in yellow either, and I would definitely divert £500 into a Nationwide Flexclusive.

sensiblelady

Hi
I am new to the forum so bear with me! I am just wondering if I am being thick(also!!) But my 12 months moneysaver account with TSB just matured expecting 5% interest on £3,000. I have only received £77. How is the 5% calculated? Anyone had the same thing happen to them?

KTF

For a regular saver account, the interest you get is approx equivalent to half the saved amount. i.e. 5% of 1500 is £75.

See the calculator at the bottom of this page: http://www.moneysavingexpert.com/savings/best-regular-savings-accounts

eskbanker

sensiblelady wrote: »

Hi
I am new to the forum so bear with me! I am just wondering if I am being thick(also!!) But my 12 months moneysaver account with TSB just matured expecting 5% interest on £3,000. I have only received £77. How is the 5% calculated? Anyone had the same thing happen to them?

The 5% is calculated on daily balances, so if the balance only reached £3K for the last few days/weeks then of course you won't get a full year's interest on the whole lot. You're certainly not the first to believe that your interest on a regular saver will be the headline rate multiplied by the full closing balance but that's not the way they work, as it's only the first £250 that's been in there for the full year to earn 5%.

So, the average balance for the year will be closer to £1,500 and therefore the interest will be very roughly 5% of that, so £77 sounds right.

pafpcg

AR2012 wrote: »

I’ve mocked up what 50K in savings can get a single person.

Why have you set-up direct debits on the FlexDirect and TSB accounts? From my recollection of the requirements to qualify for 5% interest on the FlexDirect, there's no mention of needing any direct debits - just a £1,000pm credit from a non-Nationwide source and similarly for the TSB account which needs only £500pm. And to nit-pick even further, the Santander123 direct debits don't need to be paid monthly, only that that there are two in place which can probably be easily solved by irregularly-paying direct debits such as credit cards or utility bills.

Note also that the FlexDirect 5% interest rate is not available indefinitely, only for 12 months and then again in alternate years, until Nationwide change their marketing strategy.....

And you thought you could explain things with a simple diagram? Nice thought though.

xylophone

But my 12 months moneysaver account with TSB just matured expecting 5% interest on £3,000. I have only received £77. How is the 5% calculated? Anyone had the same thing happen to them?

Presumably a regular saver - £250 a month?

Think about it.

You have only had the full £3000 in the account for one month.....put very simply

£250 @ 5% for 12 months, £500 @ 5% for eleven months, £750 @ 5% for ten months, and so on.

If £3000 had been deposited in full on day one, you would have expected around £150 in interest - taking account of the above, you will see that the interest accrued on a regular saver at term equates to roughly half the RS rate.