How many Regular Savings Accounts do you have?

JohnRo

Wheres_My_Cashback wrote: »

Does it ? Are you sure? I believe it does what it says in the advertising and gives you a full 5% on every single penny for each day it's saved

Every day it earns 5% AER.. therein lies the issue. How many days the contributions are offered that annual equivalent rate before the offered rate reverts to something close to zero.

soulsaver

JohnRo wrote: »

Every day it earns 5% AER.. therein lies the issue. How many days the contributions are offered that annual equivalent rate before the offered rate reverts to something close to zero.

No issue for people who understand that banks/bs don't pay you interest on money that you haven't deposited...

EachPenny

JohnRo wrote: »

Every day it earns 5% AER.. therein lies the issue. How many days the contributions are offered that annual equivalent rate before the offered rate reverts to something close to zero.

At which point you immediately pull the money out and move it elsewhere. No different than a fixed-rate account which offers a very attractive 'headline' rate but drops to something closer to zero at maturity.

Willing2Learn

JohnRo wrote: »

Every day it earns 5% AER.. therein lies the issue. How many days the contributions are offered that annual equivalent rate before the offered rate reverts to something close to zero.

This is all about money management. Why would I keep the money in a matured account when I can just open another RS account?

EachPenny

soulsaver wrote: »

No issue for people who understand that banks/bs don't pay you interest on money that you haven't deposited...

Er, I can think of one which might. :whistle:;)

JohnRo

EachPenny wrote: »

TFor example, by ignoring Virgin's accounts paying 2.5% (because they are %) where are you earning >2.5% on the money which will later be funding the RS accounts that you do have?

I don't know the contribution limits on Virgin's RS account but in isolation the obvious answer is that any deposit account which pays an annual rate on the total amount, which the RS throttles, that results in a net interest paid gain.

£250 a month on 2.5% AER pays about £35

£250 x 12 = £3000 so anything at about 1.2% beats that RS.

JohnRo

EachPenny wrote: »

Er, I can think of one which might. :whistle:;)

You're not doing yourself any favours.

EachPenny

JohnRo wrote: »

I don't know the contribution limits on Virgin's RS account but in isolation the obvious answer is that any deposit account which pays an annual rate on the total amount, which the RS throttles, that results in a net interest paid gain.

£250 a month on 2.5% AER pays about £35

£250 x 12 = £3000 so anything at about 1.2% beats that RS.

Except that unless you are keeping the rest of your money under the matress, the funds which aren't yet in the Virgin RS will be earning interest (at the best rate you can get).

In the case of Virgin, that could be another Virgin RS account, also earning 2.5%

EachPenny

JohnRo wrote: »

You're not doing yourself any favours.

People who know the bank I'm talking about will know what I mean. :money:

JohnRo

EachPenny wrote: »

Except that unless you are keeping the rest of your money under the matress, the funds which aren't yet in the Virgin RS will be earning interest (at the best rate you can get).

In the case of Virgin, that could be another Virgin RS account, also earning 2.5%

This is getting starnger and stranger, why would you put anything in a 2.5% RS that can otherwise be earning more interest in a regular deposit account, on an annual basis, that offers something close to half the RS headline interest rate on the whole amount for the whole year.