Interest current account vs ISA

YorkshireBoy

JoeBG90 wrote: »

Yea I remember that but it says interest is paid in March 2015....so my money is doing nothing in the account until that month surely? I could keep it somewhere that gives me a monthly interest... or do I have to keep it in there to earn the interest at the end of the year? Am I making sense?

I'm close to giving up here but in the spirit of your profession I'll have one more go...


Each day you have £1,000 in Nationwide you'll earn...


£1,000 x 2.59% / 365 = £0.07


Each day you have £1,000 in Santander you'll earn...


£1,000 x 2.96% / 365 x 0.8 = £0.06


Figures rounded, and 0.8 is the tax multiplier


The £0.06 Santander figure will compound each month (by a miniscule amount), ie you'll earn interest the following month on £1,000.06. With Nationwide this doesn't happen, because interest accrues in the background and is paid once a year.

JoeBG90

Yes I understand that bit perfectly. Thank you for putting up with me but I don't think I'm explaining this second part properly.

You said the interest in my nationwide account is accruing in the background throughout the year on whatever's in the account and is then paid at the end of the year? Am I understanding that correctly?

So I need to have as much in there to build up the interest.

So I can't just put in a minimum payment and throw a big chunk in all or the last month to earn the interest because it's been building up all year.

YorkshireBoy

Do you agree that Nationwide pays a higher interest rate than Santander does after tax?...and remember we're talking gross p.a. here, not AER

If yes, do you agree that the faster you can fill this account with the cash that's currently residing in Santander the more interest you'll earn (until March 2015 when the Nationwide rate drops)?

It doesn't get any simpler than what I said earlier...you'll make a penny a day more (that's a 16% increase) in Nationwide per £1,000 savings you have...at any given moment in time. And there are around 240 days left until the Nationwide rate drops in March.

So if your average savings balance between now and then is, say, £4K, then that's a tenner more.

Speaking personally, I have some room in a Santander 1-2-3 account, but I'm putting my spare cash in my Nationwide Regular Saver ISA...simply because I'll make me more money (between now and next March).

JoeBG90

Yes I agree to all you've said. I think It's been overcomplicated. I will put as much as I can into the nationwide account.

Thank you for your time and advice.

YorkshireBoy

JoeBG90 wrote: »

I think It's been overcomplicated.

I did say in my first reply...

do you want to make 2.59% at Nationwide or are you happy with only 2.37%...at Santander?

That should have been enough really.


But you've made the right decision. Be sure you're on the ball when the Nationwide rate drops next March. You may even be transferring it back, and out of the ISA wrapper, to Santander if there aren't any decent ISA rates available to transfer to at that time.

LanieK

Saffron BS has an account paying 4% gross interest

Archi_Bald

LanieK wrote: »

Saffron BS has an account paying 4% gross interest

That's a regular saver with max £200/mth and other limitations. http://www.saffronbs.co.uk/savings/display.product.php?categoryID=1&category=general&productID=g2

Much easier to get a 4% Club Lloyds that allows £400/mth. May be even easier to get the 6% FD one with £300/mth max.

badger09

Archi_Bald wrote: »

That's a regular saver with max £200/mth and other limitations. http://www.saffronbs.co.uk/savings/display.product.php?categoryID=1&category=general&productID=g2

Its also available to a fairly limited customer base:cool: