are regular savers worth it?

stringer_bell

My situation

Maxed out 123
Got all the high paying interest current accounts
premium bonds maxed

Is it worth opening regular savers, for instance I have a santander 123 and I see they have a regular saver. TSB also, LLoyds.. I already have a nationwide regular saver

jimjames

Worth it if you need more cash and have filled all the other options. Personally I dont use them as I don't need that much cash but if you are saving for a property etc they can be very useful additions. You must have a huge amount of cash to have maxed out all those accounts and premium bonds, is there a reason for so much?

colsten

Any of the 5% and 6% ones are very likely to be worth it. You can use the MSE dripfeed calculator to work out how much extra you can make.

Doshwaster

colsten wrote: »

Any of the 5% and 6% ones are very likely to be worth it. You can use the MSE dripfeed calculator to work out how much extra you can make.

Well, you've persuaded me. Just signed up for the HSBC Advance 6% regular saver (took 2 minutes online). Far better than the 1.4% I'm getting on my ISA.

bowlhead99

'Worth it' is all relative.

For example, you mention you have all the top current accounts, so like me you probably have a Lloyds club account with 4-5k in it earning 4%. Lloyds also have a regular saver paying 4% on a monthly standing order deposit of up to £400.

Depending exactly how much cash you have, and some of your money is earning 5% and some 4% and some 3% etc, maybe the lowest rate you're receiving on your current or savings account is 2%. So, if that money was sitting in the Lloyds regular saver, it would be earning 2% more than that.

You already have a Lloyds online login. If you spend 15 minutes now opening a Lloyds regular saver account and putting £400 into it and changing your usual monthly standing orders to accommodate the new monthly cash movements, you will get another 400 out of your worst paying account into the new Lloyds account each and every month until next February when you'll have 4800 sitting in the account for a full month before the account converts into a 'normal' online savings account with a worse rate at the end of a year from now.

Averaged over the whole of the year, your average balance in the regular saver account is a bit over £2.5k. And it's earning 2% more than it would be in your worst account. 2% on about £2.5k is about £50. So, by spending the 15 minutes to set it up, you have made yourself £50. Or £40 if you have to pay basic rate tax. Or £30 or less if you have a higher rate of tax to pay.

Is it worth you spending 15 minutes for a free £30 or £40? Maybe, maybe not. For one: after the end of the year it will definitely revert to a quite a low paying account and you'll need to move it, which requires some non-zero effort and some research, whereas perhaps just leaving it where it currently is would not need effort. And add the time you spent reading the terms of the account, and checking that the standing order was OK, and reading this post telling you about it. So you're perhaps spending a half hour of your time on getting the £30 not just five minutes or 15 minutes or whatever the headlines tell you.

Are there other ways to get £30 in half an hour? Well, probably when your car insurance renewal comes up you could ring them back and say you don't like the price, and they'll knock off £50+. Or if they don't go for it, just find a competitor who will.

Is your time really worth £30 a half hour anyway? For some people working minimum wage, sure. For people with higher paid jobs and tens or hundreds of thousands of savings and investments who really really value their leisure time, maybe £30 is not enough reward.

Of course, if your worst paying savings account is not 2%, but closer to 0%, then the extra interest you'll be getting by using a Lloyds regular saver is 4%, not 2% - and so the extra 'money for nothing' is doubled. And if you look at other accounts (like the Nationwide one you have, or the First Direct or M&S ones or HSBC ones at 6%) the premium can be even better.

But FD and M&S and HSBC don't let you earn those rates on as much cash as you would at Lloyds or Nationwide. And you might not already have accounts with them so there is more rigmarole involved in getting set up. So if your money is pretty much already stashed at competitive rates, you may feel it's not worth the effort.

stringer_bell

bowlhead99 wrote: »

'Worth it' is all relative.

For example, you mention you have all the top current accounts, so like me you probably have a Lloyds club account with 4-5k in it earning 4%. Lloyds also have a regular saver paying 4% on a monthly standing order deposit of up to £400.

Depending exactly how much cash you have, and some of your money is earning 5% and some 4% and some 3% etc, maybe the lowest rate you're receiving on your current or savings account is 2%. So, if that money was sitting in the Lloyds regular saver, it would be earning 2% more than that.

You already have a Lloyds online login. If you spend 15 minutes now opening a Lloyds regular saver account and putting £400 into it and changing your usual monthly standing orders to accommodate the new monthly cash movements, you will get another 400 out of your worst paying account into the new Lloyds account each and every month until next February when you'll have 4800 sitting in the account for a full month before the account converts into a 'normal' online savings account with a worse rate at the end of a year from now.

Averaged over the whole of the year, your average balance in the regular saver account is a bit over £2.5k. And it's earning 2% more than it would be in your worst account. 2% on about £2.5k is about £50. So, by spending the 15 minutes to set it up, you have made yourself £50. Or £40 if you have to pay basic rate tax. Or £30 or less if you have a higher rate of tax to pay.

Is it worth you spending 15 minutes for a free £30 or £40? Maybe, maybe not. For one: after the end of the year it will definitely revert to a quite a low paying account and you'll need to move it, which requires some non-zero effort and some research, whereas perhaps just leaving it where it currently is would not need effort. And add the time you spent reading the terms of the account, and checking that the standing order was OK, and reading this post telling you about it. So you're perhaps spending a half hour of your time on getting the £30 not just five minutes or 15 minutes or whatever the headlines tell you.

Are there other ways to get £30 in half an hour? Well, probably when your car insurance renewal comes up you could ring them back and say you don't like the price, and they'll knock off £50+. Or if they don't go for it, just find a competitor who will.

Is your time really worth £30 a half hour anyway? For some people working minimum wage, sure. For people with higher paid jobs and tens or hundreds of thousands of savings and investments who really really value their leisure time, maybe £30 is not enough reward.

Of course, if your worst paying savings account is not 2%, but closer to 0%, then the extra interest you'll be getting by using a Lloyds regular saver is 4%, not 2% - and so the extra 'money for nothing' is doubled. And if you look at other accounts (like the Nationwide one you have, or the First Direct or M&S ones or HSBC ones at 6%) the premium can be even better.

But FD and M&S and HSBC don't let you earn those rates on as much cash as you would at Lloyds or Nationwide. And you might not already have accounts with them so there is more rigmarole involved in getting set up. So if your money is pretty much already stashed at competitive rates, you may feel it's not worth the effort.

thank you for long reply, I have a nationwide RS.. I have online logins to lloyds and santader and tsb, so maybe I should open up regular savers for them

edit : Just opened a club lloyds regular saver online instantly. If I fund it now via standing order, should the next one be on the 1st of next month or the 16th?

steve65e

I would change it to the 1st, on the basis that I would have more money getting more interest for longer.

Lloyds, Tsb, Nationwide will let you do that. Hsbc etc and Santander don't because they use account months.

2010

jimjames wrote: »

You must have a huge amount of cash to have maxed out all those accounts and premium bonds, is there a reason for so much?

Probably doesn`t want to lose it in that gambing den.

The Stock Market.

verybigchris

Anyone who has enough spare time to read one of Bowlhead's posts has enough spare time to set up a regular saver or two

LXdaddy

Yes Regular Savers are worth it - putting cash to work at 6% is better than leaving it in a lower earning account.


But obviously it costs effort to set up and then deal with on maturity. Only you can establish how much your time is worth and if it could be spent on some other project that brought you a greater benefit.

jimjames

2010 wrote: »

Probably doesn`t want to lose it in that gambing den.

The Stock Market.

That probably shows a lack of knowledge if you think it's gambling. Sure if you buy individual AIM shares it may be, but a balanced portfolio is probably the best way to build wealth long term. There are so many options available in a S&S ISA for example that to class them all as gambling is a bit daft.