HSBC Regular Saver Account, is the interest applied correct?

ojjy

Hi newbie here, hope someone out there can help???

I've just completed a 12 month Regular Saver account with HSBC. You know the one 8% AER interest (approx 6.4% net).

I paid in £250 per month x 12 months Totalling £3000. I didn't make any withdrawal in the period and followed all the rules.

I've just had the interest applied for the 12 months and it totals £95.96 net.

I've rung HSBC and have spoken to 3 different people (including someone who sells the product) to query the amount of interest, each of them gave me a different amount, £240, £192 and 1 didn't know!

Can anyone here shed light on what I should be getting? I was thinking around the £190 mark.

Thanks

YorkshireBoy

Without going to the trouble of calculating daily interest, the following formula is a reasonable approximation for regular saver interest...

£3,000 x 8% / 12 x 6.5 x 0.8 = £104

The difference between this figure and yours will be due to the exact dates each of the payments were made.

The reason you haven't got "around £190" is that you didn't have £3,000 in for the whole year. In fact, your 'average' balance was approximately half that (you started with £250, and ended with £3,000 in for only the final month).

I've rung HSBC and have spoken to 3 different people (including someone who sells the product) to query the amount of interest, each of them gave me a different amount, £240, £192 and 1 didn't know!

Why doesn't that surprise me? :rolleyes:

efunc

i'm 6 months into my one with £1500 in there so far, and that figure looks quite poor. i'll have to keep a close eye on it!

sashacat

Blimey, I hope someone can clear it up as I have got one of these and I'll be very disappointed if thats all that I receive.

efunc

well it does look about right when you think about it. it's just an easy way to put a little money aside. the disadvantage being that it's capped at only £250 a month.

exel1966

Looks about right to me. If you'd paid in the £250 on the 1st of each month it would probably be nearer the £110 mark.

You have to remember that you will not get 8% on the full £3000 as you didn't have that amount in there for the full year. The average in the account over the year will be approx £1500 without going into complicated calculations. That will give a return of approx £120ish gross.

Lots of people sign up for these accounts expecting more because they don't understand how they work.

Beate

Don't make the mistake of thinking you will be getting 6.4% net on the end amount. You would only get that if you had £3,000 in from the beginning for the duration of a whole year. Interest might be paid annually but is calculated daily, meaning interest is calculated on £250 in the first month, then £500 in the second month and so on. On a Regular Saver account you can say that the percentage promised would equate to roughly half the percentage if it was a lump sum, so if you have £3,000 at the end, add 3.2% (half of the net interest) to £3,000, which makes £96, so your £95.96 sounds exactly right.