Regular Savings Accounts: The Best Currently Available List!

ColdIron

subjecttocontract said:

How much extra interest does making a 13th payment provide ?

It depends upon when you make the first payment

If you open it on, say, the 2nd then the final (13th) payment gets 1 day extra interest

If you open it on the 31st the final payment gets 30 days (although the first only gets 1 day). A better way of looking at it is your first month (ish) has £400 instead of £200 and the same for all following months

Stargunner

happybagger said:

zagfles said:

snow62 said:

By my calculations, that extra £200 at 8% will at most earn £1.27 - if it's in for 30 days before the account matures.  i.e. about 4p per day.

No, if you time it right the extra £200 is in for almost a year, not a month. 

Surely it is the final (extra) payment that is the extra one? Not the first? Surely the first is made regardless, as if it isn't, the the account hasn't started?

You are incorrect, You make the 1st psyment on the last day of the month and make the 2nd payment on the 1st of the following month.

zagfles

happybagger said:

zagfles said:

snow62 said:

By my calculations, that extra £200 at 8% will at most earn £1.27 - if it's in for 30 days before the account matures.  i.e. about 4p per day.

No, if you time it right the extra £200 is in for almost a year, not a month. 

Surely it is the final (extra) payment that is the extra one? Not the first? Surely the first is made regardless, as if it isn't, the the account hasn't started?

Depends what you're comparing. If you use the MSE RS calculator or the rule of thumb interest formula from RS accounts of monthly amount x interest rate x 6.5, then you could have an extra £200 for a whole year (almost) over and above. So it's an extra £16.

If you want to compare making the 13th payment in the final calendar month with not making that payment, then you'll get a bit over 4p a day extra as above for the last month. But that's a totally pointless comparison, why wouldn't you make that payment? The rules are quite clear that you can increase the balance by £200 each calendar month, and the account lasts for a year after you open it, that allows 13 payments unless you open the account on the 1st of the month. It's not a loophole or anything, it's the way the account works.

snow62

friolento said:

happybagger said:

zagfles said:

snow62 said:

By my calculations, that extra £200 at 8% will at most earn £1.27 - if it's in for 30 days before the account matures.  i.e. about 4p per day.

No, if you time it right the extra £200 is in for almost a year, not a month. 

Surely it is the final (extra) payment that is the extra one? Not the first? Surely the first is made regardless, as if it isn't, the the account hasn't started?

I would say it is the first. As zagflies explains, instead of only £200, you start out with near enough £400. If you time it right, that is.

We're talking about the extra, 13th, payment.  If you don't add that payment, you miss out on the maximum £1.27 I stated above.  The timing of the first payment, and having virtually £400 to start with, is a separate calculation which can get you around £16 (though subtract what it would have earned elsewhere).  By making the 13th payment you get both amounts (though also subtract what you could have got elsewhere for the 13th payment if looking at the overall benefit).

subjecttocontract

So the answer is .....the 13th payment is worth a maximum of £1.27 interest.

snow62

subjecttocontract said:

So the answer is .....the 13th payment is worth a maximum of £1.27 interest.

Yes!!  As that was what your original question asked.

ColdIron

subjecttocontract said:

So the answer is .....the 13th payment is worth a maximum of £1.27 interest.

About that but you are forgetting that you have an extra £200 in the account for a year, worth an extra £16 ish

subjecttocontract

I suspect there are some who think that making that 13th payment is so worthwhile when, the total interest paid out on the account has little to do with that 13th payment.

ColdIron

Correct. The 13th payment in isolation is not the important factor

The critical thing is that these 'calendar month' type RSs (that allow a 13th payment) enable you to gain a years worth of interest on the monthly amount as long as it is opened at the end of the month

If you open it at the start of the month it's pretty much worthless

zagfles

snow62 said:

subjecttocontract said:

So the answer is .....the 13th payment is worth a maximum of £1.27 interest.

Yes!!  As that was what your original question asked.

No, it's £1.31

£200*0.08*30/366 

(and no, they don't compound interest daily, or monthly, so this is the right formula to use).

But all irrelavent anyway. There's nothing special or devious about making 13 payments rather than 12. With this account you could make 100 payments if you really wanted to. The rules are that you can't increase the account balance by more than £200 every calendar month. You can even make withdrawals and replace those withdrawals the same calendar month. Though the interest rate drops if you make more than 3 withdrawals.

The thing which I guess is of interest to most people is not "how much extra interest do I get from making payment no. 13" but "how much extra interest do I get compared to the way other RS accounts work (eg Santander, FD). The answer to which is £16 (if you get timing right). 

But for those who for some reason are specifically interested in the interest earned on payment no.13, the answer is above. I'm sure they'll find it useful