Savings Loophole Querry

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Hi
I've looked at the example given using multiple bank accounts (Bank of Scotland, TSB, Nationwide and Tesso).
I cannot see how up to £30000 is being invested continuously: it would appear that after 6 days it is only £1000 in Nationide2 and £3000 in Tesco that remains for the rest of the month. Surely interest is calculated on a daily basis for what is in the account and I don't see up to £30000 always being invested.
What am I missing?
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  • cheesetoast
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    £3000 in one Tesco account, £3000 in another Tesco account, £3000 in one BoS one, £3000 in another BoS one, £3000 in a third BoS one, and so on...

    The £30000 figure is only if you actually have £30000 to split up amongst the accounts.
  • noh
    noh Posts: 5,802 Forumite
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    edited 11 January 2017 at 11:47PM
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    £3000 in each of two Tesco current accounts
    £5000 in each of three BoS Classic Vantage accounts
    £2500 in Nationwide Flex Direct current account
    £1500 in TSB Plus current account
    £5000 in Lloyds Club current account

    Total £30000
  • TheShape
    TheShape Posts: 1,781 Forumite
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    Add in a number of the regular/monthly savers and the figure goes higher still. You could get over £40k earning 3%+ interest although that would be at a point just prior to all the regular savers maturing.
  • Zanderman
    Zanderman Posts: 4,697 Forumite
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    edited 12 January 2017 at 9:57AM
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    noh wrote: »
    £3000 in each of two Tesco current accounts
    £5000 in each of three BoS Classic Vantage accounts
    £2500 in Nationwide Flex Direct current account
    £1500 in TSB Plus current account
    £5000 in Lloyds Club current account

    Total £30000
    TheShape wrote: »
    Add in a number of the regular/monthly savers and the figure goes higher still. You could get over £40k earning 3%+ interest although that would be at a point just prior to all the regular savers maturing.

    And if you are a couple the figure goes higher still - as you can each have 2 tesco accounts, 3 BoS accounts, a TSB, a Lloyds Club etc. Plus some joint ones (TSB, Lloyds Club etc).

    So, without troubling the Reg Savers, noh's list above is doubled (to £60k) and some joint accounts added (TSB, Lloyds, Nwide etc) to add another £10k at least.

    Plus TheShape's regular savers X 2 for a couple.

    Which means that a couple with about £150k or so to spare could bank the whole lot at 3% average, maybe more. But it would require quite a lot of organising. And continual attention to make sure it keeps working.
  • Eco_Miser
    Eco_Miser Posts: 4,708 Forumite
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    twister1 wrote: »
    Hi
    I've looked at the example given using multiple bank accounts (Bank of Scotland, TSB, Nationwide and Tesso).
    I cannot see how up to £30000 is being invested continuously: it would appear that after 6 days it is only £1000 in Nationide2 and £3000 in Tesco that remains for the rest of the month. Surely interest is calculated on a daily basis for what is in the account and I don't see up to £30000 always being invested.
    What am I missing?
    I think you are missing the £26,000 that was deposited across the accounts and NOT moved each month.
    Eco Miser
    Saving money for well over half a century
  • twister1
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    Sorry, still not getting it.
    The example given shows Month 1 Day1 £1000 to Bank of Scot.1 . This leaves Bank of Scot. 1 on Day2 and does not return to Bank of Scot. 1 until the start of Month 2 . Therefore from Month 1 Day 2 to Month 2 Day 1 there is nothing in Bank of Scot 1. The same thing happens to the other accounts. So what am I missing. Please explain.
  • YorkshireBoy
    YorkshireBoy Posts: 31,541 Forumite
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    twister1 wrote: »
    Sorry, still not getting it.
    The example given shows Month 1 Day1 £1000 to Bank of Scot.1 . This leaves Bank of Scot. 1 on Day2 and does not return to Bank of Scot. 1 until the start of Month 2 . Therefore from Month 1 Day 2 to Month 2 Day 1 there is nothing in Bank of Scot 1. The same thing happens to the other accounts. So what am I missing. Please explain.
    It is, and always has been, a poor example. Indeed, they haven't been back to update it since June last year. My advice...forget it and devise your own set up. If you had £30K you'd do the following (based on that article)...

    £5K in each of the BoS accounts. Monthly SO on the same day from 1>2>3>1

    £6K in 2 Tesco accounts. No funding required.

    £2K in each TSB account. Monthly SO same day 1>2>1

    £2.5K in each FlexDirect account. Same day £1K SOs as follows...

    BoS 1>Flex1>BoS1
    BoS 2>Flex2>BoS2

    Or a variation on that theme.

    Obviously you'd need to extract the interest, maybe factor into the SOs?
  • xylophone
    xylophone Posts: 44,596 Forumite
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  • Deneb
    Deneb Posts: 420 Forumite
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    twister1 wrote: »
    Sorry, still not getting it.
    The example given shows Month 1 Day1 £1000 to Bank of Scot.1 . This leaves Bank of Scot. 1 on Day2 and does not return to Bank of Scot. 1 until the start of Month 2 . Therefore from Month 1 Day 2 to Month 2 Day 1 there is nothing in Bank of Scot 1. The same thing happens to the other accounts. So what am I missing. Please explain.

    The idea is not to take funds out of any accounts that would result in a reduction in earned interest, or at least not for any appreciable length of time.

    So, for instance, my BoS balances stay at 5K per account. Once a month, I sit down in front of my PC and transfer £1K from one of my current accounts through each of the others in turn, gathering interest along the way, eventually returning the original £1K plus collected interest to the account it original left a few minutes previously.

    Some people automate this by setting up a number of payment transfers in their accounts, but personally I find it easier just to manually send the money round its circular route and back, which takes about 20 minutes max, once a month.
  • polymaff
    polymaff Posts: 3,905 Forumite
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    edited 14 January 2017 at 6:57PM
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    twister1 wrote: »
    Sorry, still not getting it.
    The example given shows Month 1 Day1 £1000 to Bank of Scot.1 . This leaves Bank of Scot. 1 on Day2 and does not return to Bank of Scot. 1 until the start of Month 2 . Therefore from Month 1 Day 2 to Month 2 Day 1 there is nothing in Bank of Scot 1. The same thing happens to the other accounts. So what am I missing. Please explain.

    What I think that you are missing is that the money that stays put earns the interest and the money that travels fulfills the terms and conditions that give rise to that interest.

    The former is your capital. The latter is actually zero as after you've played musical chairs each month, the balances in all of the accounts are exactly what they were beforehand.

    That game of musical chairs, using the Faster Payments System, need not last longer than an hour - so it is quite invisible to the interest-calculating algorithms, which depend upon the closing balance each day.
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