RS sense check

onwards&upwards

Can anyone help with my maths/logic on this?  Sorry I posted it on the Regular Saver thread but it doesn’t really belong there.

I have £5000 to save.  £1500 will go in a TSB current account to get 3%.  

£300 a month will go in a First Direct RS at 2.75%
£500 a month will go in a Coventry BS RS at 2.5%

After 4 months of paying into the Coventry and 5 months of paying into the FD the £5000 will all be paid in.  Am I right in thinking it’s better to lock money away in the Coventry at 2.5% sooner rather than leaving it at a measly 1.35% in Marcus for longer so I can put it in the FD at 2.75% later on, right?   My brain is deserting me on the actual numbers but this feels right!

EthicsGradient

Yes, that makes sense (get as much as you can as quickly as you can into the higher-paying accounts, and put the last £300 into FD since that pays better), and I shoved it all into a spreadsheet to check - £3574.29 if you put it all in FD, £3577.37 if you put it all in Cov, and £3584.83 if you use your mix (this assumes putting the Marcus interest in the last regular payment you make). You'd lose a few pence by stopping Cov a month earlier and contributing to FD for longer.

onwards&upwards

Thank you very much that is fantastically helpful!

Notepad_Phil

One thing to check -  are you planning to stop paying into the First Direct regular saver after the fifth month? I think you may have to pay in a minimum of £25 every month so you may have to keep some additional money aside if that was your intention and you won't have that money available from the sixth month onwards.

Post 5 of https://forums.moneysavingexpert.com/discussion/5776240/regular-saver-thread-new-and-restarted/p1# would seem to agree that First Direct does not allow you to miss any payments. I've no idea what First Direct would do if someone did stop paying in, but they might close it and return the money into the current account it came from at the Savings Account variable rate which is a lot lower than the regular saver rate.

onwards&upwards

Notepad_Phil said:

One thing to check -  are you planning to stop paying into the First Direct regular saver after the fifth month? I think you may have to pay in a minimum of £25 every month so you may have to keep some additional money aside if that was your intention and you won't have that money available from the sixth month onwards.

Post 5 of https://forums.moneysavingexpert.com/discussion/5776240/regular-saver-thread-new-and-restarted/p1# would seem to agree that First Direct does not allow you to miss any payments. I've no idea what First Direct would do if someone did stop paying in, but they might close it and return the money into the current account it came from at the Savings Account variable rate which is a lot lower than the regular saver rate.

Hi, I will keep paying in every month just a lower amount from my salary, probably £50.  You can adjust the amount of the standing order at any time. 

Notepad_Phil

onwards&upwards said:
Hi, I will keep paying in every month just a lower amount from my salary, probably £50.  You can adjust the amount of the standing order at any time. 

I thought you probably would do, but just wanted to be 100% sure that you didn't get bitten by the terms as some accounts do allow you to stop but others don't.

onwards&upwards

Notepad_Phil said:

onwards&upwards said:
Hi, I will keep paying in every month just a lower amount from my salary, probably £50.  You can adjust the amount of the standing order at any time. 

I thought you probably would do, but just wanted to be 100% sure that you didn't get bitten by the terms as some accounts do allow you to stop but others don't.

No, I appreciate it.  I think you can miss payments with the Coventry RS, I need to double check, that one isn’t up and running yet. 

colsten

onwards&upwards said:

Hi, I will keep paying in every month just a lower amount from my salary, probably £50.  You can adjust the amount of the standing order at any time. 

Yes but it looks as if you have to call First Direct to do that. It won't allow me changing the amount online or in the app.

colsten

onwards&upwards said:

No, I appreciate it.  I think you can miss payments with the Coventry RS, I need to double check, that one isn’t up and running yet. 

You can. It seems even possible to make withdrawals from the Coventry RS, without any interest penalties

EDIT: as pointed out by onwards&upwards now, there is a 30 day interest penalty on the withdrawn amount

onwards&upwards

colsten said:

onwards&upwards said:

Hi, I will keep paying in every month just a lower amount from my salary, probably £50.  You can adjust the amount of the standing order at any time. 

Yes but it looks as if you have to call First Direct to do that. It won't allow me changing the amount online or in the app.

I don’t mind calling, they answer quickly and their selling point is they are a phone based bank so it makes sense. 

onwards&upwards

colsten said:

onwards&upwards said:

No, I appreciate it.  I think you can miss payments with the Coventry RS, I need to double check, that one isn’t up and running yet. 

You can. It seems even possible to make withdrawals from the Coventry RS, without any interest penalties

It’s a 30 day interest penalty, so best to leave it in there but not a disaster if it’s needed in a major emergency.