Working out interest on regular savings accounts

Pjpern

Hi,
Is there a formula for working out an annual interest rate for a regular savings account. For example, Nationwide pay 5% pa with a max of £250 per month paid in. With all the different amounts, how does this get worked out? Do you take an average/mean amount for the year and then times it by the 5%? They must have a way to let you know immediately. If it was one amount staying in for the year, that's simple but the amount going up every month makes it quite difficult to work out (for me anyway )

quirkydeptless

https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/#calculator

eskbanker

The interest is calculated daily based on the balance on that day, so if you pay £250 into a 5% regular saver, the interest earned on the first day will be £250 x 5% / 365, and the same calculation is effectively repeated for the remaining 364 days too, so, as the balance increases, the daily interest earned increases correspondingly too as each month goes by.

MSE provides a calculator if you want to work it out yourself, at https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/#calculator, and the product websites will typically include illustrative examples too, such as Nationwide's:

The estimated balance after 12 months based on 12 monthly deposits of £250 with an interest rate of 5.00% AER/ gross p.a. (variable) would be £3,081.25.

The estimated balances are for illustration only and assume that:

• each deposit is made on the first day of each calendar month
• no further deposits or withdrawals are made
• there is no change to the interest rate.

If you're interested in the Nationwide regular saver, you'd better get in quick as it's only available for a few more hours now....

ColdIron

If you want a quick ready reckoner then Monthly Amount * Rate * 6.5 will get you pretty close for a 12 month saver so 250 * 0.05 * 6.5 = £81.25

wiseonesomeofthetime

eskbanker wrote: »

If you're interested in the Nationwide regular saver, you'd better get in quick as it's only available for a few more hours now....

Trouble is, now it's variable, there's little point in calculating the possible interest as the rate could change within a month!

colsten

wiseonesomeofthetime wrote: »

Trouble is, now it's variable, there's little point in calculating the possible interest as the rate could change within a month!

It's always been variable if I remember correctly, and no, they could not change it within a month. As long as you have £100 or more in your account, they will send you a personal notification at least 14 days before they make the change. If you want to, you then have 30 days from the date of notification, to tell them you want to close your account. I.e. it's 6 weeks or more before they can change the interest rate.

But in any case, there is currently absolutely no instant access account which offers more than 5% AER. So even if you can't work out the exact amount of interest, you can with 100% certainty say that you won't get anything more anywhere else, with instant, penalty-free, access to your money should you need it.

surreysaver

As a quick rough guess, assuming you pay in the maximum allowed at the same time every month, I just divide the total you will be paying in by 2, then multiply by the percentage rate

Wheres_My_Cashback

wiseonesomeofthetime wrote: »

Trouble is, now it's variable, there's little point in calculating the possible interest as the rate could change within a month!

It always has been and the likelihood of it changing within a month....minimal I'd suggest as it's never changed since conception.