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first direct regular saver - 6%
Comments
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Maybe it's because that account "matures", ie ends, whereas the regular saver is converted to a different account type.By that logic a 6 month fixed rate account paying interest at maturity would have to quote half the AER vs the gross rate, which would be wrong (take Nationwide as an example, they would have to advertise their 6 month bond as being 1.1% Gross, 0.55% AER).
Right - and the FD regular saver, like the Nationwide regular saver ISA, is coverted to a different account with a lower rate, which is why Nationwide quote 2.33% AER on their regular saver ISA based on deposits now. Deposits later will have a lower AER, and likewise deposits later into the FD account will have a lower AER using the same definition.If the account is closed within 12 months of you making the deposit, that shouldn't affect AER - only a rate drop where the money continues to be held in the account would do so.
A few years ago I remember Halifax advertising a regular saver with 6%pa, paid annually at the end of the year, but the AER was quoted as 6.05%. It took me a while to work out the logic of that one - but being really sad I did!0 -
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Whoosh....Archi_Bald wrote: »The AER of the First Direct Regular Saver is 6%, not any more and not any less, and is not affected by when you make your monthly payments.0 -
Archi_Bald wrote: »The AER of the First Direct Regular Saver is 6%, not any more and not any less, and is not affected by when you make your monthly payments.
Quite correct, the AER is the same 6% regardless of how you look at it.
However, the ROI is about 3.19%. You put in £300 over 12 months, then the bank pays you 3.19% on that £3600. The ROI obviously depends on how much you deposit.
People confuse the two.0 -
No, the gross pa is 6%. The AER on monthly deposits after the first isn't, using Nationwide's definition.Quite correct, the AER is the same 6% regardless of how you look at it.
No, the ROI, ie rate of interest, is the rate at which money increases. That is 6% pa, and it makes no difference how long the money is in the account, just like your speed is 60mph no matter how long you drive at that speed.However, the ROI is about 3.19%. You put in £300 over 12 months, then the bank pays you 3.19% on that £3600. The ROI obviously depends on how much you deposit.
People confuse the two.
The amount of interest earned is 3.19% of total deposits.0 -
I think Hominu was referring to Return on Investment, not Rate of Interest.
Former: 3.19%, latter 6%.I am one of the Dogs of the Index.0 -
Ah yes, that makes sense. Though to be pedantic I make it 3.25% rather than 3.19%ChesterDog wrote: »I think Hominu was referring to Return on Investment, not Rate of Interest.
Former: 3.19%, latter 6%.
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Yes, and then they call the AER ROI, or make some other claims, such as that the AER is incorrect etc.People confuse the two.
Both, the gross rate and the AER of the First Direct Reg Saver are 6%. Not more, not less. The reason both rates are the same is that the same rate of interest applies throughout the duration of the account, and is paid just once, upon maturity. So there is no compounding.No, the gross pa is 6%.The AER on monthly deposits after the first isn't, using Nationwide's definition.
There are a couple of reasons why the Nationwide AER and gross rate that you keep quoting are different. Firstly, Nationwide pay monthly interest on their Regular Saver ISA. Secondly, the timescale they have chosen for their AER calculation spans two different interest rates. To quote from the Nationwide site:* The AER has been calculated assuming the account is opened on 01 July 2014 and receives an interest rate of 2.59% tax-free variable until 31 March 2015, then transfers into our Instant ISA Saver with a balance of £1,000+ and receives an interest rate of 1.50% tax-free variable (the Instant ISA Saver rate that currently applies for balances of £1,000+) from 01 April 2015 to 30 June 2015.
The Nationwide example does not mean that the numbers First Direct quote are wrong. Nor does it mean that First Direct pay anything but 6% gross, which equates to 6% AER, for the duration of the Regular Saver.
ROI is generally understood as "Return On Investment"No, the ROI, ie rate of interest0 -
It's a bit daft that we have ROI meaning two different, but related things.
We shall have to add it to the 'Stop calling fixed-term savings accounts Bonds' campaign.I am one of the Dogs of the Index.0 -
The amount of interest earned is 3.19% of total deposits.
To be pedantic, that only applies under a certain set of rules, such as depositing £300 every month for 12 months.
Under FD's T&Cs, if you don't make the maximum subscription in any one month, you just carry it forward to future months. Interest is calculated daily. So you could deposit 10x£25 and 2x£1675. The only way of working out the expected interest is taking the 6% value and calculating it for each day the money is in the account.0
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