Which is better-amount or rate

Lasvegasbaby

Help! Is it better to save £100 per month in to a 4.5% interest rate account which transfers the balance (£1200+int) out annually OR in an account with 2.3% interest rate and a balance of £12k which will increase by appx £3k per year? Which account will gain the most intetest? Tia x

couriervanman

Low interest and high balance

Low interest high balance

Shedman

I may have had too much red wine tonight but doesn't that question read much the same as "What is better... a banana or an apple". How can you even compare £12k lump sum in an account with £100 amount monthly saver (let alone where can you get 4.5% on any savings account these days)??

bowlhead99

High interest and low balance

Lasvegasbaby wrote: »

Help! Is it better to save £100 per month in to a 4.5% interest rate account which transfers the balance (£1200+int) out annually OR in an account with 2.3% interest rate and a balance of £12k which will increase by appx £3k per year? Which account will gain the most intetest? Tia x

Would I rather have an account which started the year at £0 and has £100 added each month to £1200 at the end of the year? Or would |I prefer an account that starts at £12000 rising by £250 a month (£3000 a year).

Clearly it is better to be the second person and have thousands more pounds.

If you start the year at £12000 and your account balance rises smoothly to £15000 by the end of the year, your average balance is about £13,500

If you start the year at £0 and add £100 a month your average balance is more like £6-700.

I would rather have £13500 earning 2.3% (over £300 of interest a year), than £6-700 earning 4.5% (about £30 a year). Are you seriously asking us to vote on this? I suggest you don't go to Lasvegasbaby if you can't decide which is more interest.

But if I had £12000 I would still use the '£100 a month, 4.5% interest' account in addition to my main savings account if it paid better interest per pound saved and was not much hassle to open the account.

More money or better interest rate, is a somewhat silly question. Give me a choice between £1,000,000 earning 0.01% a year and £100 earning 100% a year, it is the same amount of interest but I would prefer to be a millionaire please.

cloud_dog

Remember people, schools are out.

redpete

The poll asks for opinions without enough information to make a sensible decision. The question in the post has detailed information that leads to a clear (but pointless) answer, opinion doesn't come into it.

masonic

High interest and low balance

It's better to have both (that goes for all high rate low balance accounts available, plus the best available high balance lower rate account for your excess cash).

Katiehound

Possibly yet another inane poll?

ps I am willing to carry out an experiment if someone will give me the funds quoted above. In fact the £12k would be a pleasant little earner or pocket money.........

lpgm

This reads like an exam question from some dystopian future.