Have Reg Savers had their day? What are alternatives?

arsenalboy

There was a time when there was a decent gap between Regular Saver rates and Instant Access but over the last 2 years that has been greatly eroded to the extent one wonders the future of regular savers.
As I am well into retirement I no longer want the long term ride of investments and have liquidated into cash which means finding the best rates are critical.
New regular savers, on the whole, seem pegged to 2% whilst instant access is circa 1.5% at best. This is only .5% extra for a considerable amount of work given the number of regular savers some of us have. However, this extra .5% equals an extra 33% income from interest. Yes I have all the higher rate regular savers, but even these have collapsed from 5% to 2.75% or disappeared altogether.
Over the years I have chased the interest rates down but am now scratching my head!

What are others doing/going to do?  

ctdctd

As you say, 2% is not worth the effort.

I'm not bothering with regular savers any more unless 2.5% or above with a bank I already deal with or 3% or above if new.

Most of the cash that was circulating round RS's is now in 2 or 3 year fixed accounts with equally poor rates but no ongoing effort!

arsenalboy

ctdctd said:

Most of the cash that was circulating round RS's is now in 2 or 3 year fixed accounts with equally poor rates but no ongoing effort!

Same here at present but those rates are pathetic at 1.8/1.85%  and dropping by the month.

LobsterMemory

Well, if interest rates really are critical, then I think you'll have to suck up the extra faff

Do you have to have everything in Instant Access though? You can get 1.65% on a 1-year fix or 1.9% on a 3 year.

bowlhead99

arsenalboy said:

There was a time when there was a 
New regular savers, on the whole, seem pegged to 2% whilst instant access is circa 1.5% at best. This is only .5% extra for a considerable amount of work given the number of regular savers some of us have. However, this extra .5% equals an extra 33% income from interest. Yes I have all the higher rate regular savers, but even these have collapsed from 5% to 2.75% or disappeared altogether.
Over the years I have chased the interest rates down but am now scratching my head!

What are others doing/going to do?  

What they'll likely do is accept that they can either jump through hoops or lock their money away for a longer term to get 33% more interest... or not make those jumps and commitments and keep the easy access rates.

Previously, the 33% was a bigger number so the carrot for a person who doesn't really want hassle was more tempting for them to reluctantly take it up. As the carrot is smaller, there's less reward from bothering to dig it up.

It's like going for a day of metal-detectoring when you know someone else has already taken the gold, so any finds will just be silver or bronze. You might still do it if you want the lower reward. Some people would give it up because they have a tipping point for what's 'worth it' to them.

Longer term and with investment risk, investments will be an option for some. Certainly 5% regular saver accounts were competitive against the potential range of returns from a lower risk investment fund, but a 2% RS may be less so, causing some extra people to consider investments if they really don't need the money back until the longer term.

But people who aren't in the market for investments simply have a choice: spend time and effort pursuing the higher-paying accounts, or don't. If you pursue them, you'll get diminishing returns with each new account (because you'll use the best/easiest ones first) as has always been the case.

But the bottom line is that nobody really wants to pay you a risk free return as much as - or greater than - inflation, other than as a marketing exercise which will have limited life. No such thing as a free lunch

colsten

I am still doing 2% ones, alongside the 2.5%, 2.75%, 3% and 3.5% ones. Clearly, I prefer the latter, and I can currently get at least £3,625 a month into the higher paying ones (and some more with a bit of jiggery-pokery I won't be discussing in public).

Even if you still get 1.5% in instant access, you would make £34 more from £12k if you drip-fed £1,000 a month into a 2% RS. Granted, you'd need 4 or 5 RSs to do that but it's easy enough in most cases to apply online, set up a standing order, and forget about it for 12 months. It's usually all done in less than 10 minutes, incl. recording of the account in AceMoney. 
I only draw the line on accounts which I can't apply for online, or those who still insist on sending cheques with the matured balance, but even there I make exceptions. If the bank/BS is just down the road, or if they offer telephone applications, I'll still got for it. I am retired and have oodles of time so none of this counts as effort for me. I appreciate it would be quite different if I was still working.

Vortigern

A benefit of most (but not all) regular savers is that the interest rate is fixed for the term of the account. So while 2% is barely above today's instant access rates, those instant access rates could fall soon.

And unlike a fixed term deposit, the cash in a regular saver can often be accessed on demand.

[Deleted User]

colsten said:

I am still doing 2% ones, alongside the 2.5%, 2.75%, 3% and 3.5% ones. Clearly, I prefer the latter, and I can currently get at least £3,625 a month into the higher paying ones (and some more with a bit of jiggery-pokery I won't be discussing in public).

Even if you still get 1.5% in instant access, you would make £34 more from £12k if you drip-fed £1,000 a month into a 2% RS. Granted, you'd need 4 or 5 RSs to do that but it's easy enough in most cases to apply online, set up a standing order, and forget about it for 12 months. It's usually all done in less than 10 minutes, incl. recording of the account in AceMoney. 
I only draw the line on accounts which I can't apply for online, or those who still insist on sending cheques with the matured balance, but even there I make exceptions. If the bank/BS is just down the road, or if they offer telephone applications, I'll still got for it. I am retired and have oodles of time so none of this counts as effort for me. I appreciate it would be quite different if I was still working.

I'm following the same path as  Colsten. Now that Marcus is now down to 1.45% (from 1.5%) at best, even the 2% RS accounts are worthwhile. I may still do some postal applications, however, but very much depends on the circumsrances.  For example, I have been putting away £500 per month since May 2019 into Loughborough BS Save to Buy RS, paying 3% pa (but variable, so likely will drop). It is time unlimited, but up to max balance of £24,000 (so three years' saving at £500pcm). It was a postal application only and has no online access for balance checking (but that can be done quickly by phone. Glad I did it.

ColdIron

The thing is it all adds up. I remember that from 2017 to 2018 we were all whipping ourselves into a frenzy at the announcement of a new Virgin Regular E-Saver every couple of months, and that was only 2.25%. Sure they went up to 2.50% across the board towards the end but we weren't to know that when we opened them

One RS won't make much difference but with minimal effort it's not hard to have an average balance of £15,000 or more at 2.00% or better, and with the direction of travel of rates for the foreseeable the cumulative benefit is worth the (tiny) bother for me. It's the MSE thing to do

Huggy_Bear

ColdIron said:

The thing is it all adds up.

I'm planning how I can drip feed into a couple of accounts, poss 3 with a lump sum from my Marcus a/c which is dropping down to 1.3 %, so I'm planning:

Coventry BS @2.5% £500 per month

Virgin RS @2% £250 per month

Principality @2% £500 per month

Yes it takes a bit of effort to set up transfers, but I'm not earning a f/t salary at the moment so wanting to make the most of the savings I have. If I get this right I'll get £176 in interest (brain can't quite work out what that figure would be if I left the lump sum alone in Marcus at 1.3%)

colsten

Huggy_Bear said:

ColdIron said:

The thing is it all adds up.

I'm planning how I can drip feed into a couple of accounts, poss 3 with a lump sum from my Marcus a/c which is dropping down to 1.3 %, so I'm planning:

Coventry BS @2.5% £500 per month

Virgin RS @2% £250 per month

Principality @2% £500 per month

Yes it takes a bit of effort to set up transfers, but I'm not earning a f/t salary at the moment so wanting to make the most of the savings I have. If I get this right I'll get £176 in interest (brain can't quite work out what that figure would be if I left the lump sum alone in Marcus at 1.3%)

You need 12 x £500 = £6,000 plus 12 x £750 = £9,000, i.e. a total of £15,000 in Marcus. At 1.3%, that's £195 interest after a year.

Dripfeeding as per your plan will yield a total of £268, so £73 more (~37% more) than if you left the money in Marcus.

You can use the MSE Regular Saver calculator to verify these numbers.