Virgin Money Regular Saver interest

colsten

Fingerbobs said:

colsten said:

Fingerbobs said:

OK, I concede that, for people who are operating very close to their PSA limit, there may be an advantage in opting for annual interest, in that it pushes the interest payment into the following tax year, but that can only help short-term if you're in danger of going over in the current tax year, but not the following one. 

Aside from that, all of the reasons people give for choosing annual interest seem to be to do with simplifying the updating of their spreadsheets, rather than an actual advantage. They're effectively forfeiting an advantage of the account in order to simplify their "tracking" spreadsheet. 

For the vast majority of people, there is no reason not to select monthly interest. 

Help me with this - what is the advantage I am forfeiting by not going for monthly payment (where offered)? Bearing in mind that

1. I do not have a need for the cash before the annual payment date
2. I manually record, and need to manually record for tax purposes, all my income, including savings interest, with the date it occurs

You're forfeiting the advantage of being paid your interest sooner. That is an advantage - the fact that you don't care about it is irrelevant - you are still passing up that advantage by not selecting monthly interest. 

It may be an advantage for you. It isn't one for me. In fact, all I can see are disadvantages for me.

Fingerbobs

colsten said:

Fingerbobs said:

colsten said:

Fingerbobs said:

OK, I concede that, for people who are operating very close to their PSA limit, there may be an advantage in opting for annual interest, in that it pushes the interest payment into the following tax year, but that can only help short-term if you're in danger of going over in the current tax year, but not the following one. 

Aside from that, all of the reasons people give for choosing annual interest seem to be to do with simplifying the updating of their spreadsheets, rather than an actual advantage. They're effectively forfeiting an advantage of the account in order to simplify their "tracking" spreadsheet. 

For the vast majority of people, there is no reason not to select monthly interest. 

Help me with this - what is the advantage I am forfeiting by not going for monthly payment (where offered)? Bearing in mind that

1. I do not have a need for the cash before the annual payment date
2. I manually record, and need to manually record for tax purposes, all my income, including savings interest, with the date it occurs

You're forfeiting the advantage of being paid your interest sooner. That is an advantage - the fact that you don't care about it is irrelevant - you are still passing up that advantage by not selecting monthly interest. 

It may be an advantage for you. It isn't one for me. In fact, all I can see are disadvantages for me.

It's an advantage for everyone, including you - it's just one that you have decided is outweighed by the additional burden of tracking monthly interest payments, which most people don't have to do.

Eco_Miser

Fingerbobs said:

colsten said:

I always use annual, especially with regular savers and fixed term accounts, as it's a lot less work to track the interest payment. I can't see any advantage in getting monthly interest unless you want/need to spend it each month - what am I missing?

Nothing. Your "unless" covers it. As far as I can see, there are only disadvantages (albeit minor ones) to choosing annual interest, so why not have monthly interest? You get exactly the same amount of money over the year, but with monthly interest you get access to portions of it sooner. Where's the disadvantage?

But do you? (at sub 1% rates, probably).

The AER of an account paying monthly interest is based on the money staying in the account and compounding. The gross rate of a monthly account is slightly smaller than an annual account with the same AER. Therefore the annual account pays more, unless you leave the interest untouched, in which case what was the point of having it paid monthly?

veryintrigued

veryintrigued said:

Just bumping this up for later this week 

Wasn't expecting over three pages on annual Vs monthly interest when I bumped this up!

colsten

Fingerbobs said:

colsten said:

Fingerbobs said:

colsten said:

Fingerbobs said:

OK, I concede that, for people who are operating very close to their PSA limit, there may be an advantage in opting for annual interest, in that it pushes the interest payment into the following tax year, but that can only help short-term if you're in danger of going over in the current tax year, but not the following one. 

Aside from that, all of the reasons people give for choosing annual interest seem to be to do with simplifying the updating of their spreadsheets, rather than an actual advantage. They're effectively forfeiting an advantage of the account in order to simplify their "tracking" spreadsheet. 

For the vast majority of people, there is no reason not to select monthly interest. 

Help me with this - what is the advantage I am forfeiting by not going for monthly payment (where offered)? Bearing in mind that

1. I do not have a need for the cash before the annual payment date
2. I manually record, and need to manually record for tax purposes, all my income, including savings interest, with the date it occurs

You're forfeiting the advantage of being paid your interest sooner. That is an advantage - the fact that you don't care about it is irrelevant - you are still passing up that advantage by not selecting monthly interest. 

It may be an advantage for you. It isn't one for me. In fact, all I can see are disadvantages for me.

It's an advantage for everyone, including you - it's just one that you have decided is outweighed by the additional burden of tracking monthly interest payments, which most people don't have to do.

Look, it is NOT an advantage for me, because I do not need the money on a monthly basis, and I wouldn't know what to do with it. I would certainly not be able to make any additional interest or other gain from it, and I am not minded to spend it.

It might all be different for you, and that is fine. The important fact to remember, for all of us, is that different people have different circumstances and requirements. 

colsten

Eco_Miser said:

Fingerbobs said:

colsten said:

I always use annual, especially with regular savers and fixed term accounts, as it's a lot less work to track the interest payment. I can't see any advantage in getting monthly interest unless you want/need to spend it each month - what am I missing?

Nothing. Your "unless" covers it. As far as I can see, there are only disadvantages (albeit minor ones) to choosing annual interest, so why not have monthly interest? You get exactly the same amount of money over the year, but with monthly interest you get access to portions of it sooner. Where's the disadvantage?

But do you? (at sub 1% rates, probably).

The AER of an account paying monthly interest is based on the money staying in the account and compounding. The gross rate of a monthly account is slightly smaller than an annual account with the same AER. Therefore the annual account pays more, unless you leave the interest untouched, in which case what was the point of having it paid monthly?

I suppose you might, at least in theory, be able to deposit your interest from one account into a different account that pays a higher rate than the account that generated the interest.

For example, if you used the monthly interest from a 1.75% AER Virgin Money RS(*) towards your deposit for a 3.5% YBS RS, you'd obviously make better use of the interest generated from the Virgin Money RS. But it would make such a tiny difference that it is hardly worth mentioning. On top of this, you'd need to be eligible for the 3.5% account to even consider it. Other favourable circumstances might involve a blue moon or other natural phenomenen.

* I don't even know whether the Virgin RS offers monthly interest, so forgive me if it doesn't. It was just an example.

colsten

JamesRobinson48 said:

colsten said:

* I don't even know whether the Virgin RS offers monthly interest, so forgive me if it doesn't. It was just an example.

As it happens, the Virgin RS does offer monthly interest. Currently I do generally go for that, purely for income tax reasons.  My marginal tax rate % on interest income will be much higher for the next tax year than it is for the present tax year (ending 5th April 2021). Therefore, I'm attempting to bring taxable income forward into the current tax year, where it makes sense.  Were it not for those specialised current tax circumstances, I would default to annual interest.

There you are, an example of one of the few who can benefit [once] for tax purposes, as I said there might be, many posts ago.

Time4T_Accounts

Largely, but not necessarily for everyone, nullified by the FSCS, is that once the interest has been paid to you then you won’t be a creditor of any institution that fails. Might be of value to someone...?

colsten

Steve_PL_too said:

Largely, but not necessarily for everyone, nullified by the FSCS, is that once the interest has been paid to you then you won’t be a creditor of any institution that fails. Might be of value to someone...?

What does nullified by the FSCS mean, please? Who or what says that FSCS protection depends on whether you have received interest?

Time4T_Accounts

colsten said:

Steve_PL_too said:

Largely, but not necessarily for everyone, nullified by the FSCS, is that once the interest has been paid to you then you won’t be a creditor of any institution that fails. Might be of value to someone...?

What does nullified by the FSCS mean, please? Who or what says that FSCS protection depends on whether you have received interest?

Nullified in the sense that if you’ve already received your interest then you don’t have to rely on being covered by the scheme, whereas those who wait to receive their interest annually could have to forego their interest in the event of failure simply because they are creditors.  The interest is due, but not paid.  Not paid = not covered. Extremely unlikely, granted.