# isa or current accounts for savings ?

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• Forumite Posts: 31,541
Forumite
edited 30 December 2014 at 5:33PM
kemp596 wrote: »
the first direct pays the interest monthly I believe so £90 in the year after tax, where as the £3600 in a 4% account would earn £115 interest in a year ?
You don't earn interest on money not yet saved!

Both figures are AERs...so you can compare like for like. And 6% AER is always going to return more interest than 5% AER, eg with TSB, (or 4% as in your example above).

And your FD regular saver pays interest at the end of the year. Maybe (re)familiarise yourself with the T&Cs?

So you have £300 a month to save. Your choice is whether to save it in an account paying 6% AER or an account paying 4-5% AER. It really is as simple as that.
• Forumite Posts: 8,283
Forumite
kemp596 wrote: »
the first direct pays the interest monthly I believe so £90 in the year after tax, where as the £3600 in a 4% account would earn £115 interest in a year ?
The FD RS pays annually not monthly but it's immaterial. Don't forget that not all of your money will be in the RS for a year but equally the money that is not in it will not be earning no interest either. Have a look at the RS calculator using the drip feed option

http://www.moneysavingexpert.com/savings/best-regular-savings-accounts?_ga=1.228673301.848687664.1419141137#calculator

There's not much in it but since the OP has a First Account anyway it would seem a shame not to take advantage
• Forumite Posts: 37 Forumite
You don't earn interest on money not yet saved!

Both figures are AERs...so you can compare like for like. And 6% AER is always going to return more interest than 5% AER, eg with TSB, (or 4% as in your example above).

And your FD regular saver pays interest at the end of the year. Maybe (re)familiarise yourself with the T&Cs?

So you have £300 a month to save. Your choice is whether to save it in an account paying 6% AER or an account paying 4-5% AER. It really is as simple as that.

I do have the £3600 now, i was going to pay it in monthly to the regular saver as it was 6%pa the interest pays at the end of the year, but it is calculated Daily, so for the first month it would be 6% of £300, where as in the club lloyds account be 4% on £3600 in the first month, which is obviously more ?!
• Forumite Posts: 8,283
Forumite
kemp596 wrote: »
which is obviously more ?!
No, have you plugged your numbers into the calculator?
• Forumite Posts: 31,541
Forumite
kemp596 wrote: »
I do have the £3600 now, i was going to pay it in monthly to the regular saver as it was 6%pa the interest pays at the end of the year, but it is calculated Daily, so for the first month it would be 6% of £300, where as in the club lloyds account be 4% on £3600 in the first month, which is obviously more ?!
You're not being very clear with things, unless I'm being particularly slow today!

How much cash have you got now? £4.1K?...£7.7K? (£4.1K + £3.6K)?...Or what?
• Forumite Posts: 37 Forumite
You're not being very clear with things, unless I'm being particularly slow today!

How much cash have you got now? £4.1K?...£7.7K? (£4.1K + £3.6K)?...Or what?

i probably havent been clear earlier, I have a total of 9k in cash, 5k of which I was looking at paying into two high interest current acc, and 3600 i was going to use to pay 300 a month into the FD regular saver, and £400 to keep to pay off some graduate account OD.

Therefore saving a total of £3600 in the FD RS at 6% would earn £93 at the end of the year after tax, where as putting the whole £3600 into club lloyds at 4% would earn £115 after tax.
• Forumite Posts: 31,541
Forumite
edited 30 December 2014 at 6:21PM
kemp596 wrote: »
i probably havent been clear earlier, I have a total of 9k in cash, 5k of which I was looking at paying into two high interest current acc, and 3600 i was going to use to pay 300 a month into the FD regular saver, and £400 to keep to pay off some graduate account OD.
Presumably you're working? So fund the FD regular saver from income, or, if you're not working or unable to save from income, drip feed it from the other accounts (being mindful of the £4K minimum at Lloyds).
Therefore saving a total of £3600 in the FD RS at 6% would earn £93 at the end of the year after tax, where as putting the whole £3600 into club lloyds at 4% would earn £115 after tax.
What you're clearly forgetting is that the £3.6K is making interest somewhere before it's paid to FD...the so called drip-feeding process. EG, if you have £3,600 in 5% accounts feeding the 6% FD regular saver, your annual interest is:

£3,600 x 6% / 12 x 6.5 = £117

Plus

£3,600 x 5% / 12 x 5.5 = £82.50

So a total of £199.50 gross (£159.60 after BR tax deducted), which is an aggregate 199.50 / 3,600 x 100 = 5.54% gross.
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