The Top Easy Access Savings Discussion Area

flaneurs_lobster

masonic said:

 It also helps to confirm that your network provider has appropriate measures in place to prevent someone else performing a SIM swap. As mentioned above, SMS-based authentication is becoming commonplace, despite better solutions existing.

Someone elsewhere on the board was complaining mightily that O2 were insisting that they would need to attend a store with photo-id before they would issue a replacement (swap) SIM.

I thought that this was just the sort of security I would welcome but then again I have 5 or so O2 stores within a few miles.  

sturgeon

What about phones with an e-sim as per the latest iPhone?

spider42

nic_c said:

martinm1 said:

europa said:

Rollinghome said:

europa said:

Rollinghome said:

grumbler said:

Rollinghome said:

flobbalobbalob said:

Rollinghome said:

Justsayit7 said:

Cynergy not doing monthly interest are missing a trick. 4.80%

Could be, but with banks like Cynergy offering new accounts after 11 days, any serious rate hoppers opting for monthly interest would be losing a smidgeon if they kept switching accounts.  

When an annual account is paying 4.80%, a monthly version would only pay 4.70% after a month.  The monthly rate will only match the annual rate if closed on an anniversary.

But then I never understood why anyone would want monthly interest from an easy access account. For a one or more years fixed term I do understand.

4.8% AER pays exactly the same per day as 4.7% monthly . Both accrue the same interest daily and nothing to do with an aniversary.

You clearly don't understand what AER means do you?  I'll give you a clue, it means annual equivalent rate, not daily equivalent rate.

An account paying 4.7% interest monthly will pay a daily applied rate of 4.7%. Compounded each month that will give you the equivalent of 4.8% (AER) after 12 months, and only after 12 months.  If you close the account at one month there will be no compounding so you will only get 4.7%.  You will only get 4.8% AER if held for a full year or following anniversaries.

 '4.8% annual' will pay a daily applied rate of 4.8%  No matter when the account is closed, you will still get 4.8% AER.
If that isn't clear, you need to try googling.

I'm not convinced. Can you google and post a reliable proof, preferably with an example of calculation?

And even if what you say is true, I don't see any significant difference for 4.7% and 4.8%.

1.048^(1/12) = 1.00391

4.7/12 = 0.392

Nope sorry. I've wasted enough time on this already.  It's your money and if you still don't get it, you don't get it. DYOR.

Andy's point above is completely right too.  If you open the Cynergy account with 4.8% AER annual interest, you'd get more than that if you closed the account and so compounded early. Always assuming the new account paid the same rate or better.

We aren't talking big numbers here, unless a very large sum is held in the account.  The applied rate for monthly is just 0.10% lower, but interest received will be a little bit lower if held for less than 12 months or another anniversary of the account.  Annual Equivalent Rate means you get that rate if held for a year.

This is incredibly useful info. I am relatively savvy with these things, and even i thought monthly interest (with the same AER) was equivalent regardless of when the money is withdrawn. So many thanks for alerting me and others to this important anomaly !

That's good.  It's not a lot of money to worry about unless the balance is large but just as well in our pocket as in the bank's.  And it might be why so many banks are offering monthly only accounts now.

Indeed. If i were a bank, that's exactly what i would do. AER clearly isn't fit for purpose. 

It is fit for purpose as it allows comparing different products to normalise them over one year.  Compound interest seems to confuse a lot of people, so I'm sure that's why AER was introduced.

Especially those on here who seem to think AER isn't "fit for purpose"

Whether an account pays interest monthly or annually, if the AER is the same and any deposits/withdrawals the same, the interest you get after 12 months will be the same. If you close it part way through the year (assuming no penalties) then you'd get the same interest.

AER was introduced to allow people to compare products easily, often prior to it's introduction you'd get banks etc quoting whatever interest rate version that made it look most favourable (e.g. loans quoted on gross, credit cards on monthly equivalents etc)

I'm afraid this is wholly inaccurate. If you close part way through the year, you most definitely will NOT receive the same amount of interest in a monthly versus an annual account. It won't be much different, but it will be different. This should be obvious if consider what happens if you close an account after a month. Let's look at the Paragon Double Access account as an example. Annual rate (and AER of the monthly account) is 4.75%. The gross rate for the monthly account is 4.65%. When left to compound over a full year this will leave you with 4.75%.

But if you close after a month, then with a monthly account, you've received 4.65% for a month (let's suppose 4.65%/12 for simplicity, although in reality, it would be 4.65% * days in the month / 365).

With an annual account closed after a month, you'd earn 4.75%/12. An annual paying account would therefore clearly receive more interest than the monthly account if closed after a month.

intalex

spider42 said:

I'm afraid this is wholly inaccurate. If you close part way through the year, you most definitely will NOT receive the same amount of interest in a monthly versus an annual account. It won't be much different, but it will be different. This should be obvious if consider what happens if you close an account after a month. Let's look at the Paragon Double Access account as an example. Annual rate (and AER of the monthly account) is 4.75%. The gross rate for the monthly account is 4.65%. When left to compound over a full year this will leave you with 4.75%.

But if you close after a month, then with a monthly account, you've received 4.65% for a month (let's suppose 4.65%/12 for simplicity, although in reality, it would be 4.65% * days in the month / 365).

With an annual account closed after a month, you'd earn 4.75%/12. An annual paying account would therefore clearly receive more interest than the monthly account if closed after a month.

Correct, and even more relevant with the frequency of new accounts/issues driving multiple account opening and closure...

flaneurs_lobster

sturgeon said:

What about phones with an e-sim as per the latest iPhone?

No difference, the same processes and vulnerabilities exist, albeit without a tiny bit of plastic needing to be moved about.  

NanookOfTheNorth

Message this morning in online banking from Santander saying the Easy Access Saver Limited Edition (Issue 1) increasing to 4.05% (3.98% gross) in next 5 working days.  They're not too interested in keeping up with the competition at those rates.

Wheres_My_Cashback

NanookOfTheNorth said:

Message this morning in online banking from Santander saying the Easy Access Saver Limited Edition (Issue 1) increasing to 4.05% (3.98% gross) in next 5 working days.  They're not too interested in keeping up with the competition at those rates.

Already updated to accounts for what it's worth.

Rollinghome

Wheres_My_Cashback said:

NanookOfTheNorth said:

Message this morning in online banking from Santander saying the Easy Access Saver Limited Edition (Issue 1) increasing to 4.05% (3.98% gross) in next 5 working days.  They're not too interested in keeping up with the competition at those rates.

Already updated to accounts for what it's worth.

It'll be used by some customers so they've a bit of cash they can quickly switch into their current account. Not much use as a savings account.

So as not to be too noticed by their existing customers, they introduced a better account under their Cahoot brand paying 4.60% that was competitive for about a day.

flobbalobbalob

spider42 said:

nic_c said:

martinm1 said:

europa said:

Rollinghome said:

europa said:

Rollinghome said:

grumbler said:

Rollinghome said:

flobbalobbalob said:

Rollinghome said:

Justsayit7 said:

Cynergy not doing monthly interest are missing a trick. 4.80%

Could be, but with banks like Cynergy offering new accounts after 11 days, any serious rate hoppers opting for monthly interest would be losing a smidgeon if they kept switching accounts.  

When an annual account is paying 4.80%, a monthly version would only pay 4.70% after a month.  The monthly rate will only match the annual rate if closed on an anniversary.

But then I never understood why anyone would want monthly interest from an easy access account. For a one or more years fixed term I do understand.

4.8% AER pays exactly the same per day as 4.7% monthly . Both accrue the same interest daily and nothing to do with an aniversary.

You clearly don't understand what AER means do you?  I'll give you a clue, it means annual equivalent rate, not daily equivalent rate.

An account paying 4.7% interest monthly will pay a daily applied rate of 4.7%. Compounded each month that will give you the equivalent of 4.8% (AER) after 12 months, and only after 12 months.  If you close the account at one month there will be no compounding so you will only get 4.7%.  You will only get 4.8% AER if held for a full year or following anniversaries.

 '4.8% annual' will pay a daily applied rate of 4.8%  No matter when the account is closed, you will still get 4.8% AER.
If that isn't clear, you need to try googling.

I'm not convinced. Can you google and post a reliable proof, preferably with an example of calculation?

And even if what you say is true, I don't see any significant difference for 4.7% and 4.8%.

1.048^(1/12) = 1.00391

4.7/12 = 0.392

Nope sorry. I've wasted enough time on this already.  It's your money and if you still don't get it, you don't get it. DYOR.

Andy's point above is completely right too.  If you open the Cynergy account with 4.8% AER annual interest, you'd get more than that if you closed the account and so compounded early. Always assuming the new account paid the same rate or better.

We aren't talking big numbers here, unless a very large sum is held in the account.  The applied rate for monthly is just 0.10% lower, but interest received will be a little bit lower if held for less than 12 months or another anniversary of the account.  Annual Equivalent Rate means you get that rate if held for a year.

This is incredibly useful info. I am relatively savvy with these things, and even i thought monthly interest (with the same AER) was equivalent regardless of when the money is withdrawn. So many thanks for alerting me and others to this important anomaly !

That's good.  It's not a lot of money to worry about unless the balance is large but just as well in our pocket as in the bank's.  And it might be why so many banks are offering monthly only accounts now.

Indeed. If i were a bank, that's exactly what i would do. AER clearly isn't fit for purpose. 

It is fit for purpose as it allows comparing different products to normalise them over one year.  Compound interest seems to confuse a lot of people, so I'm sure that's why AER was introduced.

Especially those on here who seem to think AER isn't "fit for purpose"

Whether an account pays interest monthly or annually, if the AER is the same and any deposits/withdrawals the same, the interest you get after 12 months will be the same. If you close it part way through the year (assuming no penalties) then you'd get the same interest.

AER was introduced to allow people to compare products easily, often prior to it's introduction you'd get banks etc quoting whatever interest rate version that made it look most favourable (e.g. loans quoted on gross, credit cards on monthly equivalents etc)

I'm afraid this is wholly inaccurate. If you close part way through the year, you most definitely will NOT receive the same amount of interest in a monthly versus an annual account. It won't be much different, but it will be different. This should be obvious if consider what happens if you close an account after a month. Let's look at the Paragon Double Access account as an example. Annual rate (and AER of the monthly account) is 4.75%. The gross rate for the monthly account is 4.65%. When left to compound over a full year this will leave you with 4.75%.

But if you close after a month, then with a monthly account, you've received 4.65% for a month (let's suppose 4.65%/12 for simplicity, although in reality, it would be 4.65% * days in the month / 365).

With an annual account closed after a month, you'd earn 4.75%/12. An annual paying account would therefore clearly receive more interest than the monthly account if closed after a month.

On my Marcus online savings account (monthly interest option) the interest is "calculated daily and paid monthly" .  The monthly interest added matches the amount I calculated using compounding the daily interest over the number of days since the previous month. So I think it matches the annual option apart from some rounding errors on the pennies each month which seem to always round up. 

grumbler

spider42 said:

nic_c said:

martinm1 said:

europa said:

Rollinghome said:

europa said:

Rollinghome said:

grumbler said:

Rollinghome said:

flobbalobbalob said:

Rollinghome said:

Justsayit7 said:

Cynergy not doing monthly interest are missing a trick. 4.80%

Could be, but with banks like Cynergy offering new accounts after 11 days, any serious rate hoppers opting for monthly interest would be losing a smidgeon if they kept switching accounts.  

When an annual account is paying 4.80%, a monthly version would only pay 4.70% after a month.  The monthly rate will only match the annual rate if closed on an anniversary.

But then I never understood why anyone would want monthly interest from an easy access account. For a one or more years fixed term I do understand.

4.8% AER pays exactly the same per day as 4.7% monthly . Both accrue the same interest daily and nothing to do with an aniversary.

You clearly don't understand what AER means do you?  I'll give you a clue, it means annual equivalent rate, not daily equivalent rate.

An account paying 4.7% interest monthly will pay a daily applied rate of 4.7%. Compounded each month that will give you the equivalent of 4.8% (AER) after 12 months, and only after 12 months.  If you close the account at one month there will be no compounding so you will only get 4.7%.  You will only get 4.8% AER if held for a full year or following anniversaries.

 '4.8% annual' will pay a daily applied rate of 4.8%  No matter when the account is closed, you will still get 4.8% AER.
If that isn't clear, you need to try googling.

I'm not convinced. Can you google and post a reliable proof, preferably with an example of calculation?

And even if what you say is true, I don't see any significant difference for 4.7% and 4.8%.

1.048^(1/12) = 1.00391

4.7/12 = 0.392

Nope sorry. I've wasted enough time on this already.  It's your money and if you still don't get it, you don't get it. DYOR.

Andy's point above is completely right too.  If you open the Cynergy account with 4.8% AER annual interest, you'd get more than that if you closed the account and so compounded early. Always assuming the new account paid the same rate or better.

We aren't talking big numbers here, unless a very large sum is held in the account.  The applied rate for monthly is just 0.10% lower, but interest received will be a little bit lower if held for less than 12 months or another anniversary of the account.  Annual Equivalent Rate means you get that rate if held for a year.

This is incredibly useful info. I am relatively savvy with these things, and even i thought monthly interest (with the same AER) was equivalent regardless of when the money is withdrawn. So many thanks for alerting me and others to this important anomaly !

That's good.  It's not a lot of money to worry about unless the balance is large but just as well in our pocket as in the bank's.  And it might be why so many banks are offering monthly only accounts now.

Indeed. If i were a bank, that's exactly what i would do. AER clearly isn't fit for purpose. 

It is fit for purpose as it allows comparing different products to normalise them over one year.  Compound interest seems to confuse a lot of people, so I'm sure that's why AER was introduced.

Especially those on here who seem to think AER isn't "fit for purpose"

Whether an account pays interest monthly or annually, if the AER is the same and any deposits/withdrawals the same, the interest you get after 12 months will be the same. If you close it part way through the year (assuming no penalties) then you'd get the same interest.

AER was introduced to allow people to compare products easily, often prior to it's introduction you'd get banks etc quoting whatever interest rate version that made it look most favourable (e.g. loans quoted on gross, credit cards on monthly equivalents etc)

I'm afraid this is wholly inaccurate. If you close part way through the year, you most definitely will NOT receive the same amount of interest in a monthly versus an annual account. It won't be much different, but it will be different. This should be obvious if consider what happens if you close an account after a month. Let's look at the Paragon Double Access account as an example. Annual rate (and AER of the monthly account) is 4.75%. The gross rate for the monthly account is 4.65%. When left to compound over a full year this will leave you with 4.75%.

But if you close after a month, then with a monthly account, you've received 4.65% for a month (let's suppose 4.65%/12 for simplicity, although in reality, it would be 4.65% * days in the month / 365).

With an annual account closed after a month, you'd earn 4.75%/12. An annual paying account would therefore clearly receive more interest than the monthly account if closed after a month.

Is this a fact? 
Not 1.0475^(1/12)-1 ?