Regular Savings Accounts

Bearandbull

On MSE these are recommended as a great deal but in actual fact they are not. For example take the First Direct deal of 6% pa. on a maximum of £300 per month regular savings. You only get 6% on the first month's deposit, then it goes down month by month until you get to the last 12th month when the rate reduces to 0.5%. At the end of 12 months the amount payable would be £3,717 on 12 months' deposit of £3,600. It is still better than the other deals on the market but labelling it as a 6% deal is deceiving when in fact the saver is getting an overall return of 3.25% pa.

MrBeans

6%! If it looks too good to be true...

bsms1147

You get 6% AER on the full balance at all times.

I won't reinvent the wheel here, have a read of some information.
http://www.moneysavingexpert.com/savings/best-regular-savings-accounts

SavingEnthu

We actually had the FD Reg saver (6%pa), and have another one in progress now .
At the end of the term invested 3600 (12x300) and received a NET of 3693.47 on maturity. i.e 93.47 NET interest, which is still very good considering the principle amount in the account only increases gradually by 300 each month.... It is true that its also a marketing stunt to broadcast attractive rates.. 6% is certainly among the best of this type of account...

Archi_Bald

Bearandbull wrote: »

On MSE these are recommended as a great deal but in actual fact they are not. For example take the First Direct deal of 6% pa. on a maximum of £300 per month regular savings. You only get 6% on the first month's deposit, then it goes down month by month until you get to the last 12th month when the rate reduces to 0.5%. At the end of 12 months the amount payable would be £3,717 on 12 months' deposit of £3,600. It is still better than the other deals on the market but labelling it as a 6% deal is deceiving when in fact the saver is getting an overall return of 3.25% pa.

There is no deception involved, just total misunderstanding on your part.

The AER of the FD Regular Saver is 6%, end of. The rate does not reduce at any stage throughout the 12 month life of the account.

Of course you will only ever get interest on money that is actually in the account.

veryintrigued

Bearandbull wrote: »

You only get 6% on the first month's deposit, then it goes down month by month until you get to the last 12th month when the rate reduces to 0.5%.........labelling it as a 6% deal is deceiving when in fact the saver is getting an overall return of 3.25% pa.

The last four letters of your userid are very apt for the misinformation above.

planteria

Archi_Bald wrote: »

There is no deception involved, just total misunderstanding on your part.

is absolutely bang on. Regular Savers are exactly that. you earn the rate on the funds already deposited, which increase, through the term, on the Regular (monthly) basis.

i currently HSBC's version of this 6% deal. it is exactly what it says on the tin.

Herbalus

Bearandbull wrote: »

It is still better than the other deals on the market but labelling it as a 6% deal is deceiving when in fact the saver is getting an overall return of 3.25% pa.

Not so. You get 6% on £300 for 12 months and 6% on a further £300 for 11 months, right up to the last £300 that gets 6% for one month. You're not actually putting in £3600 at the start of the year, so why are you expecting 6% on £3600 for a whole year?

Your average balance, as it starts at £300 and rises to £3600 over the year, is actually around half of £3600, which is why you get interest that is about half of what you expect.

Herbalus

MrBeans wrote: »

6%! If it looks too good to be true...

What if it's "too good to be true" but is offered by a respected and regulated UK bank?

LXdaddy

@Bearandbull What a load of [STRIKE]tosh[/STRIKE] - oops "misunderstanding" on your part.

The account does pay 6% interest per annum on everything that is deposited in the account. You don't get a smaller interest rate on the last month's deposit, you get the same 6% rate but only for a month - because the last month's contribution is only ion the account for 1 month not 1 year.

This is all clearly described on the main MSE site regular savings page.

polymaff

Oh dear, the challenge is to root out the illogicality of some of the correspondence. Here goes:

The ONLY way you gainsayers could be even a smidgeon right is if you planned to put a year's-worth of monthly payments in a non-interest-bearing account and then slowly bled it into the regular saver.

But you wouldn't be that daft, would you?