The Top Easy Access Savings Discussion Area

JimmyTheWig

money54 wrote: »

I want to invest money for my 2 year old daughter to build up a fund for when she is older (say 18). However, I want to retain control over the money so she doesn't spend it all on something inappropriate. Can you suggest what the best options might be?

If you put the money into an account in your daughter's name, then that money is hers. Legally you get no say in what she does with it.
Hopefully you and your daughter would have the relationship to discuss that you have set aside that money for her for a reason and that you want her to use it for something sensible.

If you are not happy with that then you either need to put money into something that she can't get at (e.g. a pension - I know it sounds silly for a two year old, but this is actually quite a good idea) or you need to keep it in your name (and suffer the tax implications).
It is worth remembering that over the long term (and 16 years counts as long term) stocks and shares related investments will almost definitely out-perform even the best high interest cash investments.

JimmyTheWig

veronica46 wrote: »

Is it better to have a savings account which pays the interest monthly
or one that pays interest yearly?
I am not understanding something.... and it is this.....
If the interest is paid monthly on a savings account does that mean I get greater compound interest ( if i do not touch my savings) than if it is paid yearly?

You need to compare the AER of the two accounts.
If interest is paid annually (and there are no charges, etc) then the AER will be the same as the interest rate.
If interest is paid monthly (and there are no charges, etc) then the AER will be slightly higher than the interest rate.

The AER suggests that you do exactly what you are suggesting and leave any interest in there to compound. AER is the annual equivalent rate.

So AER compares like-for-like, and so is a good thing to compare.
Luckily, all savings accounts should quote their AER.

Daichip

With all these high interest saving accounts around, such as 12% with Halifax. And the fact I have an offset mortgage with Barclays in which I can write cheques against my mortgage at 5.95%, would it make sense for me to draw off my mortgage and set up a monthly DD to a high interest account?

murphydavid

veronica46 wrote: »

Now some of you guys will think this is a dumb question, but I am no mathematician (lol!) as many of my friends will know, and so I will ask your worthy excellencies, the moneylords , the following:
Is it better to have a savings account which pays the interest monthly
or one that pays interest yearly?
I am not understanding something.... and it is this.....
If the interest is paid monthly on a savings account does that mean I get greater compound interest ( if i do not touch my savings) than if it is paid yearly?
Or is it all levelled out in some arcane gnostic way ....?
Help! i die.....
:EasterBun

If you leave your interest in the account then the amount you get is identical. The savings institutions compounds your interest daily in all cases I know of. The monthly rate they quote (which is less than the AER) is telling you how much interest you would get if you took out all your interest each month. i.e you don't get interest on the interest (compounded) after you take it out.
There may be the odd instance where the institution considers it can charge you a hidden fee for updating the info in your account 12 times a year rather than once in which case the monthly reported interest would be less and there definitely are a number of institutions who refuse to report monthly and infer that they don't do monthly interest but when you close the account you will see that they give you interest up to the day you close it. . Except there are a couple who state they will not give any interest for the month in which you make a withdrawal

murphydavid

Daichip wrote: »

With all these high interest saving accounts around, such as 12% with Halifax. And the fact I have an offset mortgage with Barclays in which I can write cheques against my mortgage at 5.95%, would it make sense for me to draw off my mortgage and set up a monthly DD to a high interest account?

What about the tax? What rate do you pay on your savings? Do you get any tax relief on your mortgage interest? (I don't have a mortgage so I don't follow it any more)
Also is there a one off fee or percentage when you write cheques against your mortgage. There is when you do it with my credit card.

JimmyTheWig

Daichip wrote: »

With all these high interest saving accounts around, such as 12% with Halifax. And the fact I have an offset mortgage with Barclays in which I can write cheques against my mortgage at 5.95%, would it make sense for me to draw off my mortgage and set up a monthly DD to a high interest account?

Depending on your income tax position, yes.
The 12% with Halifax has strings attached. It's been worked out on a different thread that it's not worth doing. But you can still get 10% with Halifax with no strings.
If you are paying income tax at the higher rate then that 10% would be worth 6% net, which wuold be barely better than what you would be borrowing it at.
But if you pay standard rate income tax, or no income tax at all, then you will be quids in with this regular saver.

Remember that if you are married, put the savings account into the name of who pays the lower rate of tax.

mrparnold

Hi, a worrying development, having opened the account as recommended to obtain 6.5% interest about a month ago, I came to transfer out some cash and the system online fails. I phoned them, of course they were unaware, checked with IT, called back saying what was the problem again, derrr, and said they'd check again and call back. 2 days later and 2 more attempts to transfer out, and no call back and the system still fails.
I fear my money is stuck in there, has anyone else got their cash out of KE? Had a similar problem?
Worried signing off.

copperman05

I too have recently opened a Kaupthing account and no problems so far but after looking at the fixed term deals I think there may be a loop hole to earn more interest than in the savings account without taking the full term.

If you take a look at the 3 year fixed term its gross rate is 7.67%, however if you break the deal (finish early) the interest is 6.67%.

In the T&C's it says that on breaking the deal you will be charged the break rate (6.67%) for every day that you had the deal.

So am I right, if I put my money into a 'deal' (fixed term for 3yrs) at 7.67% until I need the money, say in 3 months time, I will earn 6.67% on the money instead of 6.31% I'm getting by just leaving it in the savings account?

Or am I missing something?

Cheers

Ned

disney_cjd

copperman05 wrote: »

I too have recently opened a Kaupthing account and no problems so far but after looking at the fixed term deals I think there may be a loop hole to earn more interest than in the savings account without taking the full term.

If you take a look at the 3 year fixed term its gross rate is 7.67%, however if you break the deal (finish early) the interest is 6.67%.

In the T&C's it says that on breaking the deal you will be charged the break rate (6.67%) for every day that you had the deal.

So am I right, if I put my money into a 'deal' (fixed term for 3yrs) at 7.67% until I need the money, say in 3 months time, I will earn 6.67% on the money instead of 6.31% I'm getting by just leaving it in the savings account?

Or am I missing something?

Cheers

Ned

Nice one

BulletCraig

Vectra wrote: »

With Kaupthing your monthly interest is shown on your acct the first of the month whereupon you can make a simple withdrawal of the amount into your linked acct which appears in your bank 3 days later.

Am I reading this right or have I got the wrong end of the stick?

Do you not have the option to leave the interest with Kaupthing to compound? And by linked account you just mean your normal current account with another bank?