Nationwide Regular Saver (5%)

1Foz

Hey guys,

I opened one of these on 5th January this year. I also opened a similar product with First Direct. The first direct one clearly sets out in its t&c's that the maximum balance over the 12 month term is £3,600 (£300 per calendar month). The nationwide one I have makes no such mention in any of the small print (the maximum you can pay per 'calendar month' there is £250).

The reason I ask about it is this....I have changed the date payments are made from the 5th to the 1st of each month for my own convenience. The interest is paid on the anniversary of the account (5th Jan 2020). So, assuming I were to pay £250 on the first of each month from now til then, would mean I'd deposit a total of £3,250 and not £3,000 I assume this would be allowed since January next year is a new 'calendar month' and the payment made before the account was closed and interest paid. I am wondering though if, maybe, nationwide has simply neglected to make it a public fact that, actually, only £3,000 can be paid in. There is nothing that states that is the case, whereas my First Direct one clearly outlines that you can't have a balance above £3,600 at the end of the 12 month term.

Cheers!

MDMD

That is correct. You can pay in £3,250. Mine matures each year on 27th December so I make 2 payments within 4 days.

The same applies to a number of others. My Halifax RS matured yesterday. The first payment went in on 31 Jan 2018, the second on 1 Feb.

londoninvestor

I read the T&Cs the same way as you - though for the sake of the ~14p of interest you gain this way (4 days' worth of 5% interest on an extra £250) I'm not sure I'd bother with the potential argument with NW...

1Foz

Gotcha and fair point! So, the best time to open one of these really is the last day or two of a month and do as MDMD did and make two payments within a few days, so as to get the maximum out of 13 payments over 12 months.

ColdIron

That's right

MDMD

So you can quantify the effect, on the nationwide website they state that the balance based on 12 payments on 1st of the month is £3081.25, so £81.25 interest.

https://www.nationwide.co.uk/products/savings/flex-regular-online-saver/features-and-benefits

My closing balance was £3,342.01, so interest of £92.01. Not exactly life changing but better than nothing. It was better when they allowed £500 a month payments (even better when Halifax had a £500 per month 10% RS 10 years or so ago)

Bacman

These regular savers make people think they are getting 5% when in reality £81.25 interest for £3000 is just under 2.7%


You can get around that with a fixed rate 5 year bond by investing the £3000 up front, then getting around £81 interest a year for 5 years.

Alexland

Bacman wrote: »

These regular savers make people think they are getting 5% when in reality £81.25 interest for £3000 is just under 2.7%

You can get around that with a fixed rate 5 year bond by investing the £3000 up front, then getting around £81 interest a year for 5 years.

This is a common misunderstanding about regular savers. You are getting 5% on the growing balance and it would be completely unreasonable to expected 5% on the final balance when some of the money has only been in the account for a short period.

The trick is to have multiple regular savers with multiple banks started with offset dates to keep a rolling cash balance earning 5%.

Alex

YorkshireBoy

Bacman wrote: »

These regular savers make people think they are getting 5% when in reality £81.25 interest for £3000 is just under 2.7%

You can get around that with a fixed rate 5 year bond by investing the £3000 up front, then getting around £81 interest a year for 5 years.

Why would I want to tie up £3,000 for 5 years when I could do the following with it?...

Place the £3K in a savings account paying 1.5%

Interest on this account = £3,000 x 1.5% / 12 x 5.5 = £20.63

Then drip feed one of those dreadful, awful, 5% regular savers at £250/month.

This would generate interest of £3,000 x 5% / 12 x 6.5 = £81.25

My total return would be £20.63 + £81.25 = £101.88

Now £101.88 on £3,000 is 3.396%

And best of all, if I want the £3,000 back I can have it tomorrow/in a day or two...not 5 years down the line in early 2024.

cloud_dog

Bacman wrote: »

These regular savers make people think they are getting 5% when in reality £81.25 interest for £3000 is just under 2.7%

Your basic premise is incorrect, from then on your other comments are equally incorrect.

RS pay 5% on the money in the account accrued on a daily basis for the amount in the account. The only difference is that there are restrictions on the amount and frequency you can deposit money in to the account.

EarthBoy

Bacman wrote: »

These regular savers make people think they are getting 5% when in reality £81.25 interest for £3000 is just under 2.7%

You can get around that with a fixed rate 5 year bond by investing the £3000 up front, then getting around £81 interest a year for 5 years.

I am indeed getting 5% on my regular saver. You could only earn the same amount of interest on a fixed rate bond if you happen to have the full £3000 to spare to start with, and some of us aren't in that fortunate position. My monthly payments come from my monthly salary.

If you have got the £3000 up front, you can drip feed it, as Yorkshire Boy explains, and get the best of both worlds.