Nationwide to axe 5% regular savings account on Friday

short_butt_sweet

BigBlueSky wrote: »

I currently have £2,250 in mine (opened at the end of August - 23rd)

Would it be beneficial to me to close and reopen again? - It has taken a while to build up a fairly decent amount in the account?

you have (approximately) 5 months to go, during which the balance will go from £2,250 (during april) to £3,250 (during august). that's an average balance of £2,750, over 5 months. which gains the same higher interest as you'd get in a year from an average balance of £2,750 x 5/12 = £1,145.83.

that is less than the average balance of £1,625 over 12 months for a new account opened now. (see my previous post.)

so there is some advantage in moving. whether or not it's worth the effort. you'd be getting the equivalent of higher interest for a year on £1,625 - £1,145.83 = £479.17. supposing you'd be getting 1.5% if not using a regular saver, instead of 5%, then the difference is 3.5% of £479.17, which is £16.77. less any tax payable.

BigBlueSky

short_butt_sweet wrote: »

you have (approximately) 5 months to go, during which the balance will go from £2,250 (during april) to £3,250 (during august). that's an average balance of £2,750, over 5 months. which gains the same higher interest as you'd get in a year from an average balance of £2,750 x 5/12 = £1,145.83.

that is less than the average balance of £1,625 over 12 months for a new account opened now. (see my previous post.)

so there is some advantage in moving. whether or not it's worth the effort. you'd be getting the equivalent of higher interest for a year on £1,625 - £1,145.83 = £479.17. supposing you'd be getting 1.5% if not using a regular saver, instead of 5%, then the difference is 3.5% of £479.17, which is £16.77. less any tax payable.

Thank you so much for the detailed response - That is really very useful.

[Deleted User]

Opened mine. Thanks for the heads up. Shame you can only save £250 a month though

bowlhead99

colsten wrote: »

Presumably you aren't planning to earn less next year, so whether you pay 40% tax this year or next is a moot point? Obviously it is of relevance to people who do expect a drop in their income which is big enough to shift them into a lower tax band.

I don't plan to earn less salary next year but I probably won't receive as much interest income as I have this year so may not be over the £500. Resetting the regular saver account when it's only at about £1000 will not generate much in the way of extra income, and will attract tax on some of the income that may have been entirely tax free if received next year as originally expected. So, not really worth bothering with. YMMV.

d63

closed my account today, (it was due to mature on the 7th, so only a few pennies lost in accrued interest) and for the first time ever it asked me to go through a whole rigmarole involving debit cards and card reader. total panic! never used the wretched thing before! what on earth was the PIN number? (found it scribbled on the back of a piece of paper thank goodness) all the while the reader happily telling me its battery was low. doh! managed it, just, but what a performance! not sure now whether i will bother opening a new regular saver tomorrow, even if it lets me that is. all this stress! just can't take it anymore. sad.

ChaskhaChaia

I closed mine and my husband's accounts yesterday lunch time and I successfully applied for new accounts this morning.

karlie88

Can see HSBC et al. reducing the rate on their reg savers based on this news. No more competition in the reg saver world.

BigBlueSky

Closed my account just before 10am this morning. Will check randomly throughout the day to see when it will let me apply for a new one. If not, I will try again tomorrow.

glaister

I closed my account yesterday afternoon and successfully opened a new one this morning

Thanks to all on this thread for pointing out this possibility!

[Deleted User]

I am puzzled why Nationwide gave enough notice of the withdrawal of the 5% Regular Saver to allow existing accounts to be closed and replaced with new ones. They surely must have been alive to this trick. As far as I understand they could just have withdrawn the account to new applications without giving notice.

I closed mine yesterday, it was due to mature on 12 May and had £3000 in it. Got £68.60 interest, with £3,068.60 immediately transferred to my FlexAccount current account. Have opened a new RS today and transferred £250 in.