The Top Easy Access Savings Discussion Area

ahai1

The Alliance and Leicester offer the best account for a low savings amount provided that you don't make any withdrawls except in February. I was thinking of opening it but not sure as I have heard some bad things about customer service. http://www.alliance-leicester.co.uk/savings/esaver.aspx?urlgen=y&exp=30&cm_mmc=moneyexpe-_-ptr-_-ec01095000274893esaver-_-partner_4. The problem with the egg one is that the rate goes down after a year rather than it been a consistanty high rate.

Is A&L worth it?

Mr._H_2

bashful wrote: »

It looked good to me as my Ing account was only giving 3.51% gross/2.53% AER even with introductory bonus (I was an existing KE customer).

Are you sure the numbers you've quoted above are correct? It's unusual for an AER to be lower than gross. The only thing I can think of is that there's a bonus which is going to expire in under 12 months from now.

bashful wrote: »

But but but... surely 3.35% AER (which is what Martin's facts say) isn't the same as 3.35% gross (which is what Egg say)

My understanding is that 3.35% gross would be nearly 1% less in AER terms - but am happy to be corrected

No, this is not correct. AER stands for "Annual Equivalent Rate" and shows how much interest you would earn if you deposit money and leave it for a year.

For example, deposit £1000 in an account paying 3.35% AER, don't touch it for 12 months and at the end of those 12 months, you'll have £1033.50, ignoring tax. If an account pays its interest yearly and has no funky bonus trickery, the gross% and AER% would be the same.

Often, and AER figure will be higher than the gross figure - this happens when an account pays interest monthly. Imagine depositing £1000 in an account that pays 3.35% Gross, and pays interest monthly. At the end of month one, the interest payable is 33.50/12 = 2.79, so your new balance is £1002.79. This means the following month, you'll earn 3.35% gross on £1002.79; you are earning interest on your interest! This means, after a year, you'll have £1034.02. The AER for this example account is 3.402%, higher than the gross rate of 3.35%.

Now, how can you get an AER lower than the gross? Let's say there's an account with an underlying rate of 1% with a 1.5% bonus for 6 months. That means for the first six months, the rate is 2.5% gross, and for the second six months, it's 1% gross. This can legitimately be marketed as a 2.5% gross account as that's the current rate. If the interest is paid annually and you deposit £1000 at the beginning, in each of the first six months you'll earn £1000 * 0.025/12 = £2.08333, and in each of the second six months you'll earn £0.83333, for a total of £17.50. The account would therefore have an AER of 1.75%, less than the gross rate of 2.5%.

So, if the AER numbers you've quoted are correct, after 12 months you'll be better off with the money in the EGG account because 3.35% is bigger than 2.53%.

However, it seems likely that if the numbers you've given are correct, there's a bonus on your ING account which might currently be being paid but will run out soon. In this case, you'd be even better off opening the EGG account with a nominal sum (whatever's necessary to secure the advertised rate), but keep the majority of the money in ING until your bonus expires. Then move the money from ING to EGG.

murphydavid

I have an ING account ex Kaupthing and the bonus ends in 6 months hence the lower AER if you take it over a whole year.
Another lesson to be learned is to close your dormant accounts. I have an existing ing account but not had anything in it for years. I would not have qualified for the ING bonus if the Kaupthing transfer had not occurred but would have had I closed my Ing account. Mind you its sometimes harder to close an account than to open it.

Also its a good idea to read the terms published by the provider before opening an account and not just open it on a recommendation from a third party.

ahai1

I was going to apply for the Alliance and Leicester E saver as I had made my mind up to do it after considering but now it seems that the deal has either gone or the interest rate has gone down. I can't work what happened as the url that used to take me there takes me to the main savings page.

ahai1

I have had a look at the best buy table. Am I right that the best one is the ICICI 2.95% AER if I want a good consistant rate over time?

I have less than £50,000 so I don't have to worry about that and plus I don't believe the government will let people lose money.

G_M

If you can live with giving 3 month's notice you can get 3.54% at present here (+ £50 bonus when you apply ). And it will be consistantly high over time.

ahai1

I don't have £25,000 to put in so the ICICI looks the best. I will apply for it after my Yorkshire Building Society and Birmingham Midshires open up as the latter is taking a lot longer then it should with the internet bond and the former has got 5 working days which means later this week.

ahai1

I have applied for the ICICI account. I though what the hell as it is the best deal if you get rid of the bonsuses and also I will not be putting in £50,000.

By accident I found a good bond from Nothern Rock but have not applied for it and I don't think I will but if anyone is interested here is the information. http://www.northernrock.co.uk/savings/fixed-rate-bonds/fixed-rate-capped-bond_issue_14/

sussextight

Have never used this facility but I have wondered if anyone had. Effectively Egg Money (the credit card that i think might be closed to new people) has got a 4% interest on positive balances. This seems to be instantly accessible and therefore must be the best instant access rate available anywhere. Has anyone used this and are there any hidden catches i am missing. It seems to be too good to be true. However it could be that so few people use this they have just never changed the rate.

Any ideas?

nig0609

sussextight wrote: »

Have never used this facility but I have wondered if anyone had. Effectively Egg Money (the credit card that i think might be closed to new people) has got a 4% interest on positive balances. This seems to be instantly accessible and therefore must be the best instant access rate available anywhere. Has anyone used this and are there any hidden catches i am missing. It seems to be too good to be true. However it could be that so few people use this they have just never changed the rate.

Any ideas?

I started a thread on this while back, relating to the FSCS implications. As a result I have put approx 6k into it and will be using it for the bulk of my savings. Interest is paid monthly (on statement date i think), and I cannot see any implications on it. they say you can put up to 100k into it, but obviously do not go above 50k. Egg is owned by Citi which is a huge bank - their stability was in question as many other banks, but hopefully should be "too big to go bust":
http://forums.moneysavingexpert.com/showthread.html?t=1479021