Earned Interest- Do What With It?

Sea_Shell

It's turned into a bit of a hobby for me.....I should get out more!!!!:beer::rotfl::beer:

Eco_Miser

Drucifer wrote: »

Do you just let the interest build up in the account?

Not if the account is already at the maximum for paying interest.

Drucifer wrote: »

Move the interest to another account?

yes.

Drucifer wrote: »

Spend it?

Sometimes

Drucifer wrote: »

Invest it?

Sometimes.

In reality, it all, along with dividend payments and my pensions, goes into a pool labelled "My Money", which is spread across many bank accounts of various types and a variety of investments.
Some of it gets spent, some gets invested, some stays in bank accounts. I don't keep track of where individual pounds came from or where they go, just the bulk movements.

aj23_2

But don't forget that the days of living off interest off of the interest are gone. Unless rates go back up to pre-2008 levels, there's not much point in trying to chase a tenner by moving your interest to an account where you store it all when the rate is so low anyway. And if your account(s) don't have threshold caps, then there's no point taking out the interest as the interest would count towards the balance that you get paid interest on, which would be more than by moving it to an easy access. Up to you what you use it for though and what works best for you, noting foolish in that.

Dorian1958

What is your pension situation? You could increase your pension contributions by the same amount as the interest received leaving you with the same income as you had before, but giving yourself an increased pay rise in the future. You would benefit from the tax savings and also possibly (depending upon the scheme), your employer matching your contributions.

Eco_Miser

aj23 wrote: »

But don't forget that the days of living off interest are gone.

For most people they were never here, and for the rich, well, I could live quite nicely with the interest available on a million quid.

Meanwhile the extra tenner+ from playing the money-go-round pays for my meals out.

aj23_2

Eco_Miser wrote: »

For most people they were never here, and for the rich, well, I could live quite nicely with the interest available on a million quid.

Meanwhile the extra tenner+ from playing the money-go-round pays for my meals out.

Well I remember as a teen (which wasn't long ago) getting hundreds in interest every year on a couple of thousand, those days have gone, and I wouldn't have considered that being rich.

Ten pound a year might pay for a meal a year, I wouldn't go as far as pluralizing it though.

savingpennies

Even if I only earned £10 a month interest, I'd make sure it was earning as much interest as possible. I and my OH utilise several interest paying accounts and keep the maximum in each. We also use any RS that are attached to the accounts. Interest earned each month is withdrawn and added to another regular saver. Last year for us, the interest on our current accounts alone amounted to over £600 pounds, not (to us anyway) an inconsiderable sum.
We started saving like this years ago but we've only managed to get to this stage by making sure every penny was working for us

aj23_2

savingpennies wrote: »

Even if I only earned £10 a month interest, I'd make sure it was earning as much interest as possible. I and my OH utilise several interest paying accounts and keep the maximum in each. We also use any RS that are attached to the accounts. Interest earned each month is withdrawn and added to another regular saver. Last year for us, the interest on our current accounts alone amounted to over £600 pounds, not (to us anyway) an inconsiderable sum.
We started saving like this years ago but we've only managed to get to this stage by making sure every penny was working for us

As far as I know, only Santander and First Direct allow you to withdraw from Regular Saver's penalty free whenever, so unless you have either of these, I don't see how you are withdrawing the interest from Regular Saver's on a monthly basis when it is usually paid annually/on account anniversary and when most have a maximum of one or two penalty free withdrawals per year/bonus period. But as I said, maybe you have either of the two above, but even if you do, interest is paid annually on both, not monthly.

I have two current accounts, two regular savers, a HTB ISA and LISA which all earn the max too. My original point was that most of mine are accounts where there is no max balance, therefore there is no point in withdrawing the interest and moving it to a lower paying account when it already counts towards my balance year on year. For example, the interest added to my two RS and HTB count towards the balances I get on interest the following year, so if I withdrew the interest, I'd get less interest on those accounts.

jennyjj

Drucifer wrote: »

... but my question is what do you ultimately do with the earned interest?

I drink mine :beer:

Eco_Miser

aj23 wrote: »

Well I remember as a teen (which wasn't long ago) getting hundreds in interest every year on a couple of thousand, those days have gone, and I wouldn't have considered that being rich.

Most of those hundreds were required to cover the inflation losses on the capital. It's still possible to get over a hundred on a couple of thousand.

aj23 wrote: »

Ten pound a year might pay for a meal a year, I wouldn't go as far as pluralizing it though.

Ten pound a month, and being careful with my money, that pays for three or four simple hot meals out with friends. (They pay for their own meals, to avoid any misunderstanding.)