Drip-feed calculator for regular savings

arthur22

Can anyone explain why the drip-feed calculator for regular savings shows this result for a Santander 123 current account on 1.5% and a Santander regular savings account on 5%, drip-feeding £200 per month into the regular savings:

"After drip-feeding the cash for 12 months...

Total interest earned: £196
£131 from the normal savings & £65 in the regular saver.

If you'd kept the money only in the normal savings account you'd have earned £131 in interest."

The bit I don't understand is: why is the figure £131 for both scenarios? If I was transferring £200 out of the current account per month, wouldn't the interest be lower over the year for the money in that account because it is gradually going down and down?

ValiantSon

I think I understand what you are saying, but correct me if I am wrong. If you held all of the money in the 123 then you would expect a return of 1.5% over 12 months on that balance, but moving £200 per month out should result in a slightly lower amount as it would be 1.5% on a declining balance.

To test it out I've assumed the maximum balance of £20,000 in the 123 account. This should equal £300 (at 1.5%) interest. The drip-feed calculator, however, is claiming that it would only be £281. This is clearly wrong. The only solution I therefore have is that the calculator isn't working properly.

arthur22

ValiantSon wrote: »

I think I understand what you are saying, but correct me if I am wrong. If you held all of the money in the 123 then you would expect a return of 1.5% over 12 months on that balance, but moving £200 per month out should result in a slightly lower amount as it would be 1.5% on a declining balance.

Yes, that's my question exactly.

For your second paragraph, maybe something to do with tax? I've just tried your example of £20k and it gives different results for "no tax" and "basic tax".

YorkshireBoy

£10K in the 123 gives me your £131 and £65 figures, but gives me £150 If I'd left it in the 123. Looks like you've entered some duff info somewhere.

ValiantSon

YorkshireBoy wrote: »

£10K in the 123 gives me your £131 and £65 figures, but gives me £150 If I'd left it in the 123. Looks like you've entered some duff info somewhere.

I've just run the calculator again using the £10,000 figure and got the same result as the OP (which was confirmed by my running it on the £20,000) figure. The calculator is not working properly.

After drip-feeding the cash for 12 months...

Total interest earned: £196
£131 from the normal savings & £65 in the regular saver.

If you'd kept the money only in the normal savings account you'd have earned £131 in interest.

ValiantSon

arthur22 wrote: »

Yes, that's my question exactly.

For your second paragraph, maybe something to do with tax? I've just tried your example of £20k and it gives different results for "no tax" and "basic tax".

Tried that and got the same as you. This is wrong because those figures would see you paying no tax on the interest.

The calculator is not working properly.

YorkshireBoy

ValiantSon wrote: »

I've just run the calculator again using the £10,000 figure and got the same result as the OP (which was confirmed by my running it on the £20,000) figure. The calculator is not working properly.

For some of you it seems, yes...

"After drip-feeding the cash for 12 months...

Total interest earned:!£196!
£131!from the normal savings &!£65!in the regular saver.

If you'd kept the money only in the normal savings account you'd have earned!£150!in interest."


Apologies for the formatting, I'm on a mobile.

curious_squirrel

I had the same problem. The calculator works sometimes but not others. I gave up on it!

polymaff

What is wrong with the drip-feed calculator seems to be the tax calculation algorithm.

The only working option appears to be the "No Tax" option.

Anyone agree?

ValiantSon

polymaff wrote: »

What is wrong with the drip-feed calculator seems to be the tax calculation algorithm.

The only working option appears to be the "No Tax" option.

Anyone agree?

Yes, that would be my conclusion too.