Nationwide to axe 5% regular savings account on Friday

edited 30 November -1 at 1:00AM in Savings & Investments
256 replies 31.2K views
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  • fred246fred246 Forumite
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    You have only had £3k in for the last month. The first month the balance was only £250. It's calculated daily.
  • FrogletinaFrogletina Forumite
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    rcast1989 wrote: »
    OK so I have what I know is a really silly question but can someone please explain in layman's....When I opened the account I assumed the £3000 *5% = £150 total interest.

    Why is the max amount only £80.64??

    I know there i a difference between gross and AER but how is it caculatated??

    The £3000 is not in the account for the whole of the 12 months.

    You get 5% interest on the money for the length of time it is in there. The last payment, for examplei, if it is in the account for 28 days gets 5% just for those 28 days

    Nothing to with gross or AER
    Not Rachmaninov
    But Nyman
    The heart asks for pleasure first
    SPC 8 #441 £1567.31 SPC 9 #441 £1014.64 SPC 10 #441 £1164.13 SPC 11 #441 £1598.15 SPC 12 #63 £994.67 SPC 13 #63 £962.54 SPC 14 #4⭐⭐⭐⭐⭐⭐⭐⭐⭐
    Declutter thread - ⭐⭐🏅
  • rcast1989rcast1989 Forumite
    36 Posts
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    I am sorry I am still not following, in that case wouldn't it be:
    Month 1= 5% @ £12.5- £250 balance
    Month 2= £25- £500
    Month 3= £37.5- £750
    Month4= £50- £1000.....etc :/

    I put in £250 each month on the first of the month for 12 months will £3000 total upon closure
  • FrogletinaFrogletina Forumite
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    Part of the Furniture 1,000 Posts Name Dropper
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    rcast1989 wrote: »
    I am sorry I am still not following, in that case wouldn't it be:
    Month 1= 5% @ £12.5- £250 balance
    Month 2= £25- £500
    Month 3= £37.5- £750
    Month4= £50- £1000.....etc :/

    I put in £250 each month on the first of the month for 12 months will £3000 total upon closure

    No.

    The first payment of 250.00 gets 5% interest for 12 months
    The second only gets interest on 250.00 for 11 months.

    Etc
    Not Rachmaninov
    But Nyman
    The heart asks for pleasure first
    SPC 8 #441 £1567.31 SPC 9 #441 £1014.64 SPC 10 #441 £1164.13 SPC 11 #441 £1598.15 SPC 12 #63 £994.67 SPC 13 #63 £962.54 SPC 14 #4⭐⭐⭐⭐⭐⭐⭐⭐⭐
    Declutter thread - ⭐⭐🏅
  • rcast1989rcast1989 Forumite
    36 Posts
    10 Posts First Anniversary
    Yes ! OK thank you very much that makes sense
  • dcs34dcs34 Forumite
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    rcast1989 wrote: »
    I am sorry I am still not following, in that case wouldn't it be:
    Month 1= 5% @ £12.5- £250 balance
    Month 2= £25- £500
    Month 3= £37.5- £750
    Month4= £50- £1000.....etc :/

    I put in £250 each month on the first of the month for 12 months will £3000 total upon closure
    The 5% AER is an Annual Equivalent Rate, so when calculating for each month you'll need to divide the rate by 12.

    So:

    Month 1 Interest = £250 * 5% * (1/12)
    Month 2 Interest = £500 * 5% * (1/12)
    and so on...
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