Auto-saving account with help from bank

Ref52263514

Hi all,
From the beg of Oct I will be in a lot better position with my finances.


Here is my question and you may be able to assist. I live in Kent, England and I am trying to find a bank which does this.


I earn approx. £1750 a month. I get paid on 28th each month. I have worked out I can live on £1250. I want to save the remanding £500. I regularly earn overtime so I want to save this as well. Is there a bank which can see I have been paid by COMPANY X £1750 month one and they take £500 out and put it into my savings account, then on month two I earn £2000 so they take out £750 and so on etc. This to be taken out on the 29th of each month.


Also I would like them to be about to check my account the day before I get paid and see if there is any month left in it and to transfer that each month into the same account. For example, out of the £1250 I have only spent £1000, so they transfer that £250 into my savings account.


I know I can do this myself, but due to my previous poor history with money and spending etc if the bank did it for me then I will have no excuses and the money will be gone and I will not "FORGET" to do it.


I am currently with THE HALIFAX and they do not do it.


Any help would be great. Thanks

Herbalus

If you find a bank that does this, the rate on the savings will be awful. I heard RBS did it, but I don't know whether they still do.

It would be far better to do this yourself if you can. You're asking for the bank to take responsibility for your savings, but really that's something only you can do.

Lloyds have an interesting feature called 'save the change' where they round every transaction up to the nearest pound and put the extra into a savings account.

eskbanker

A couple of options to consider:

1. Set up a standing order to transfer the £500 automatically on the 29th and handle any adjustments manually.
2. Open one or more interest-paying current accounts that pay better interest than savings accounts anyway, thereby removing the need to segregate your funds, see http://www.moneysavingexpert.com/savings/savings-loophole for a guide.

alanq

First Direct offers an account sweep facility by which any balance in a current account above a specified level on a specified date is automatically moved to a savings account. However, as Herbalus suggested the rate of the savings account is awful. (0.25%).

http://www1.firstdirect.com/1/2/savings/e-saver

Better to find a savings account that pays the best available rate and then perform the transfers yourself.

colsten

alanq wrote: »

First Direct offers an account sweep facility by which any balance in a current account above a specified level on a specified date is automatically moved to a savings account. However, as Herbalus suggested the rate of the savings account is awful. (0.25%).

Whilst with just a tiny bit of self-initiative and effort, you can get 6% AER for £300/mth at FD.

I know what option I would pick.

Ref52263514

colsten wrote: »

Whilst with just a tiny bit of self-initiative and effort, you can get 6% AER for £300/mth at FD.

I know what option I would pick.

Before I read this I phoned up FD and made enquires.


If I transferred my balance current account to them I could set up a SO from my CA to there regular saver and get 6% AER then log in the day after I get paid and transfer the rest of the money to a different savings account each month and they do the sweep at the end of the month. The max I can save into the regular saver is £300/month. So at £3600 a year with 6% AER, I make that £216 interest - thank you very much. or the others are offering between 1-1.5% which is £36 - £54 a year.


I think I know what I will be doing in a months time

Herbalus

It isn't £216 per year in interest. It's actually £117, or £93 after tax.

Information is here: http://www1.firstdirect.com/1/2/savings/regular-savings-account

That's because you don't have £3600 at 6% for the whole year. The first £300 gets 6% for the year, but the second £300 only gets 6% for 11 months etc. so you only have £3600 at 6% for the last month.

Don't let that put you off though. You might think it only works out to roughly half of 6%, but saving this way would make the 1.5% interest rates appear to only be 0.75%, so it's still a lot better.

Archi_Bald

Ref52263514 wrote: »

If I transferred my balance current account to them

You do not have to transfer your current account to them in order to get access to their Regular Saver. You can just open a current account with them, and keep your existing account at the Halifax (which I hope is a Reward account and pays your £5 each month?). The transfer £300 a month by SO to First Direct, and have another SO at FD to pay the £300 into you Regular Saver with them.

First Direct's only interesting account is the Regular Saver, the rest is pants. You have to have the current account though as a pre-req, and you have to keep £1 in their standard savings account to avoid the £10/mth fee.

Herbalus wrote: »

You might think it only works out to roughly half of 6%, but saving this way would make the 1.5% interest rates appear to only be 0.75%, so it's still a lot better.

I wish people wouldn't confuse the issue by saying you only get half of 6% from the FD Regular Saver. Because you do not. You get 6% AER, and that is it. It makes no sense to compare the amount of interest you would get if you had a lump sum of £3,600 in account for 12 months with the amount you get by feeding £300 a month into an account.

The MSE Regular Saver calculator is helpful in working out the possible return.

Also, AER exists to compare like with like. 6% AER is more than 1.5% AER. No need to half anything.