Failing to understand appeal of regular savers

LXdaddy

@billywoods
You are talking about accounts that pay interest each month when the bulk of this thread is about regular savings account. None of the currently available monthly saver accounts add interest monthly.


On your reverse engineering of the formula for the account that pays interest monthly I suspect you have used the quoted AER as the % when in fact the bank uses the gross interest rate.


Using the example of Santander 123 account the gross interest rate is 2.96% equivalent to an AER 3%


if you have more than £20,000 in the account throughout a 31 day month the calculation should be
£20,000 * 2.96% * 31/365 = £50.27945 rounded to £50.28


Using your formula £20,000 * (1+3%) ^ (31/365) - £20,000 = 50.27255 rounded to £50.27




The formula for the approximate amount of interest from a monthly saver account is explained in a number of other posts in this thread (eg #4 or #26) It is monthly saving amount * 6.5 / 12 * gross%

Kumquats

Sorry to reignite this thread, but, someone on the internet is wrong.

http://www.lloydsbank.com/current-accounts.asp

Oh, hey, what would (1+0.0393/12)^12 be? Oh, 1.0400? That would be 4%? OH THAT'S INTERESTING

darkidoe

colsten wrote: »

There comes a point in probably everyone's life where you lose interest in new investments, unless you are investing for your heirs, because you can't reasonably expect to live for much longer than the next 10 years.

Aha colsten. Giving away your age there!

kovacsi76

Kumquats wrote: »

Sorry to reignite this thread, but, someone on the internet is wrong.

http://www.lloydsbank.com/current-accounts.asp

Oh, hey, what would (1+0.0393/12)^12 be? Oh, 1.0400? That would be 4%? OH THAT'S INTERESTING

You are still mixing apples and oranges.

eskbanker

kovacsi76 wrote: »

You are still mixing apples and oranges.

Together with the kumquats this is shaping up to be quite a fruit cocktail then....