The Top Easy Access Savings Discussion Area

Consumerist

Eco_Miser said:

I-LOV-MONEY said:

Consumerist said:

Regular Savers.

They have recently become my mainstay for spare income which I would ordinarily put into variable savings accounts. I'm averaging a mere 2.1% pa on these at the moment but better than nothing.

I have never really been a fan of Regular Savings.  As everybody knows you only get the full interest rate on the first month's payment.  The rest dwindles down, until month 12 when you only get 1/12th of the headline rate.    What is the advantage?

. . . (but the easy access account probably has a lower AER).

And that's the advantage of the regular saver.

2010

colsten said:

I-LOV-MONEY said: (is there a limit to how many notices you can give?).

The only notice accounts I have come across require closure at the end of the notice period. You would have to check the T&Cs of the respective account to see whether you can do what you want.

You are correct about checking T&C and not just for notice accounts.
If you had £10k in a 120 days notice account and gave notice to draw out £2k, then at the end of the notice period the £2k would be paid but the remainder would carry on and the account would not be closed.

I-LOV-MONEY

Eco

No, you get the full interest for every day the money is in the account. For the first payment this is 365 days, for the last payment it's only 30 or 31 days, but it's all at the full quoted AER, just the same as putting the same amount of money into an easy access account on the same dates (but the easy access account probably has a lower AER).

I suppose, providing 30 days is equivalent or more than an easy access account then I suppose it has some advantage.

Consumerist

I-LOV-MONEY said:

Eco

No, you get the full interest for every day the money is in the account. For the first payment this is 365 days, for the last payment it's only 30 or 31 days, but it's all at the full quoted AER, just the same as putting the same amount of money into an easy access account on the same dates (but the easy access account probably has a lower AER).

I suppose, providing 30 days is equivalent or more than an easy access account then I suppose it has some advantage.

And don't forget that if you already have ordinary variable rate savings at a lower AER than the regular saver is paying then you can gradually tip those into the regular saver month by month to maximise your overall return on savings. (The Gospel according to Martin Lewis)

I-LOV-MONEY

I think we have come to an end with this discussion!  I understand what you are saying, but unfortunately the ordinary variable savings rate is virtually 0% in most cases!   So it is the interest on the Regular Savings that is what counts.

Consumerist

I-LOV-MONEY said:

I think we have come to an end with this discussion!  I understand what you are saying, but unfortunately the ordinary variable savings rate is virtually 0% in most cases!   So it is the interest on the Regular Savings that is what counts.

It's good to blow away the cobwebs from some of the misconceptions about regular savers.

Eco_Miser

I-LOV-MONEY said:

I think we have come to an end with this discussion!  I understand what you are saying, but unfortunately the ordinary variable savings rate is virtually 0% in most cases!   So it is the interest on the Regular Savings that is what counts.

Even before rates dropped to near zero, typical Regular Savers paid considerably better rates than typical Easy Access accounts, were fixed rate,  and in some cases were actually easy access themselves.
It's always been a no-brainer to stuff as much as possible, with due regard to your cash-flow needs, into the top-paying Regular Savers, and re-cycle when they mature.

murphydavid

Consumerist said:

I-LOV-MONEY said:

Consumerist said:

If you don't already have a lump sum to save, you get the full headline rate on a month by month basis.

I didn't have a lump sum available to invest at the time, so I wasn't losing anything by using a regular saver or three.

It is probably me   but surely you would only get the full headline rate on the money that has been in the account for 12 months, ie the first month's investment.  Each subsequent investment would get a reducing percentage of the headline rate.    Unless 1/12th is a better rate than you can get on any other type of investment.   I suppose one could argue that the rate you receive until say, month 8, is better than other products.

But if I can only afford to add, say, £100 pm to my savings then I would get just the same interest as I would in an ordinary savings account at the same annual rate.

I don't like %age talk I like to think in real money.
Putting it together. £100/m saved at 2.1% nets you   £13.74 for the lifetime of the account. (first year).
So if you then re applying and the rate remains the same you can start again but now you can save £200 a month. and net £27.48 
 

Consumerist

murphydavid said:

I don't like %age talk I like to think in real money.

That could be a mistake. In my view, for what that's worth, AER is king, all other things being equal.

I don't quite follow where the £200 pm came from when you start again.

polymaff

Consumerist said:

murphydavid said:

I don't like %age talk I like to think in real money.

...  AER is king ...

I agree, the misunderstandings about Regular Savers surfaces regularly, but in the end, all you have to look at is the AER.

If you fund an RS from RI (Regular Income) you DO get the RS AER.  If you are drip-funding an RS from some other interest bearing account, then the interest achieved is about the average of the two accounts - which, by definition, cannot be lower than the lower of the two AERs involved.

Why are rates for RSs generally higher than Easy Access? For historical reasons. Save As You Earn was a scheme favoured by the government at that time as a means of encouraging savings - as could also, later, be said of cash ISAs.  Both paid higher than expected rates - until the institutions realised they were being played for mugs.

Primarily by their own marketing staff. Loss-leaders and all that guff. ...