Regular Savings Accounts: The Best Currently Available List!

twadds123

silvercar said:

twadds123 said:

just trying to plan my saving and want some understanding of why people have so many regular savers.

I guess I get it if you might require access to the cash or if the money to go into the regular savers is only generated each month.

however surely if you have a decent lump sum you don't need access to does a good fixed rate not beat the overall drip feed method?  apart from perhaps the first direct 7% saver

For example, i have a BOS regular saver @4.5% allowing £250 per month.  so £3000 in the year.

using the calculators even if i keep that money in zopa pots @3.26% drip feeding in I would make £118 interest in the year

sticking the entire £3000 in a 4.25% fix earns £127.5 on the year with no hassle.

Am i missing something?

Some people are prepared to put up with hassle to improve their interest. 

yes i'm happy with hassle for more interest, just looking to see if i'm missing something as in my example the hassle free method generates more total interest.

twadds123

Bridlington1 said:

twadds123 said:

just trying to plan my saving and want some understanding of why people have so many regular savers.

I guess I get it if you might require access to the cash or if the money to go into the regular savers is only generated each month.

however surely if you have a decent lump sum you don't need access to does a good fixed rate not beat the overall drip feed method?  apart from perhaps the first direct 7% saver

For example, i have a BOS regular saver @4.5% allowing £250 per month.  so £3000 in the year.

using the calculators even if i keep that money in zopa pots @3.26% drip feeding in I would make £118 interest in the year

sticking the entire £3000 in a 4.25% fix earns £127.5 on the year with no hassle.

Am i missing something?

I'm personally saving for my first property, which I hope to buy during the summer of 2024. If the right property pops up within the next year though, I will pounce, and having a large sum in a fix won't be much help in those circumstances so am moving my money into the top paying regular savers from the top paying easy access accounts to get more interest in the mean time.

Others use them as an alternative to keeping an emergency fund in easy access accounts in order to maximise their interest since the majority of regular savers are either easy access or allow penalty free withdrawals/early closure if needed. Others simply use them as an alternative to savings pots, so may have one regular saver for Christmas funds, another for holiday savings etc. 

Others, though this was far more common last year, speculate that interest rates will keep rising so a 1Y fix would earn less interest than regular savers, which often pay a variable rate of interest. About a year ago 1Y fixes were not much more than 1%, so those that fixed then would have ended up less interest than those who opted for a series of regular savers over the course of the last year.

thanks, that's all informative, helpful and thought provoking!

t1redmonkey

twadds123 said:

just trying to plan my saving and want some understanding of why people have so many regular savers.

I guess I get it if you might require access to the cash or if the money to go into the regular savers is only generated each month.

however surely if you have a decent lump sum you don't need access to does a good fixed rate not beat the overall drip feed method?  apart from perhaps the first direct 7% saver

For example, i have a BOS regular saver @4.5% allowing £250 per month.  so £3000 in the year.

using the calculators even if i keep that money in zopa pots @3.26% drip feeding in I would make £118 interest in the year

sticking the entire £3000 in a 4.25% fix earns £127.5 on the year with no hassle.

Am i missing something?

Basically, if you have a lump sum that you don't need access to, then you are going to have 2 options when it comes to savings:

- Put it all in a fixed rate bond which guarantees you x amount of interest for the duration
- Stick it in an easy access account, and then slowly drip feed it into a variety of regular savers

Now the advantage of the fixed rate option, is you can earn an elevated amount of interest on the entire amount from day 1 (in return for sacrificing access to the money).

The advantage of the second option is you have better access to your money, however you'll probably be earning less by having to keep most of it in an easy access account, and then you can only earn the higher regular saver interest by slowly drip feeding it into the regular savers over a period of time, not from day 1 like the first option.

It depends on your own circumstances as to which is the better option.

Personally I have done a mix of the two; I put away 90% of my savings in fixed rates a few months ago so I am getting 5%+ interest on that.  But I kept about 10% of my savings in an easy access account, and I am using that amount to drip feed it into regular savers that are accessible if I find I need the money all of a sudden (remember not all regular savers are accessible).

Also the regular savers are good for the remaining money I have from my monthly wages each month that I can afford to put away.

PRAISETHESUN

twadds123 said:

silvercar said:

twadds123 said:

just trying to plan my saving and want some understanding of why people have so many regular savers.

I guess I get it if you might require access to the cash or if the money to go into the regular savers is only generated each month.

however surely if you have a decent lump sum you don't need access to does a good fixed rate not beat the overall drip feed method?  apart from perhaps the first direct 7% saver

For example, i have a BOS regular saver @4.5% allowing £250 per month.  so £3000 in the year.

using the calculators even if i keep that money in zopa pots @3.26% drip feeding in I would make £118 interest in the year

sticking the entire £3000 in a 4.25% fix earns £127.5 on the year with no hassle.

Am i missing something?

Some people are prepared to put up with hassle to improve their interest. 

yes i'm happy with hassle for more interest, just looking to see if i'm missing something as in my example the hassle free method generates more total interest.

You're not missing anything - with the specific combination of amounts and rates you've listed you'd be better off in the 1 year fix. Usually the margins are a bit better and you'd be better off drip-feeding from a low interest easy-access account into a high interest RS account.

Additionally, oftentimes RS accounts are useful if you want to maximise interest but don't have an initial up-front lump sum to put away. Additionally, a big downside is that you're locked into the fix for the full 12 months and can't access your money, whereas many RS accounts act as easy-access accounts in the event you need to access your money in a hurry.

Section62

twadds123 said:

silvercar said:

twadds123 said:

...

sticking the entire £3000 in a 4.25% fix earns £127.5 on the year with no hassle.

Am i missing something?

Some people are prepared to put up with hassle to improve their interest. 

yes i'm happy with hassle for more interest, just looking to see if i'm missing something as in my example the hassle free method generates more total interest.

A 4.25% one-year fix is a relatively recent option - through the period of low interest rates the regular savers have consistently offered some of the best rates available.

Rising interest rates have caused some difficult decisions for RS account users.  For example, the Coventry BS First Home saver looked a poor product (e.g. 2.25% in October 2022) leading to some people withdrawing their balances (penalty free).  This product now pays 5%.  Those who stuck with it (not me) could now be earning 5% on £17,000 - which makes 4.25% look the poor account option.

Essentially there is no one 'right' answer.  Everyone needs to consider their own personal circumstances and needs, and make the best guesses they can about the future.

Descrabled

Regular Savings Strategy

Interest Rates are king, I always go for the highest AER. This will always maximise the income..

I place my savings at the highest interest rates possible. This includes 2 or 3 years fixed rate, regular savers, easy access, and ISAs

I try to minimise the amount of tax I pay by maximising my ISA savings and using ISA transfers. I will exceed my PSA this year.

I know that I need to move £20k to an ISA in the new financial year.

Most of my regular savers must be accessible before they reach maturity. The exception being First Direct at 7%.

I always compare ISAs with non ISAs by dividing their interest rates by 80%. A 4% ISA is the same as 5% non ISA.

My income is from pension and savings. My income exceeds my spending and is regular.

The agregate interest on my regular savers is 4.2%.

The mean interest rate on my overall savings is 4.17%.

I am increasing my income by culling those regular savings that pay the lowest interest.

JamesRobinson48

twadds123 said:

Am i missing something?

There is something you might be missing.

Suppose you are feeding 12 different RS accounts, with £250 per month each, total £3000 per month.  Further suppose one of those RS accounts matures each month, generating proceeds of £3000 (ignoring interest).  You could use the proceeds from that maturing RS account to feed the next monthly payment for all of the other 11 accounts, and leaving £250 over to make a first payment into a new RS account.  Structured as a ladder this way, and using the above illustrative figures, at any given time you could have ~£18k total RS account balances and you would be earning overall an RS type interest rate (say 4 or 5%) on most of it, thereby generating a monthly free cash flow from interest on each month's maturing RS account.

At the peak I had nearly 50 RS accounts at once, with total balances of ~£160k. I was paying in £14k per month, all of which was funded by proceeds of maturing RS accounts combined with withdrawals/closures of any whose rate had become less competitive. Once fully established, that RS portfolio was largely self-funding, requiring only a small cash float in instant access feeder accounts. The average running interest rate on the entire amount was materially higher than that available on a fixed rate retail bond from any building society, and overall the ease of penalty-free access was far superior. 

All that activity did involve some work, which on cold analysis the incremental taxable income might not have been sufficient to warrant. But then again, I saw it as a hobby, not as a serious income supplement.  (Ultimately life intervened, and I've scaled it back a lot).

I suspect you may find the above approach to RS accounts is not unknown among users of this thread, although over time the relative interest rates available on RS and fixed rate bonds does vary.

Nick_C

Re: why use regular savers instead of fixed interest bonds.

Cash is for emergencies.  If I have an emergency, I need instant access to my cash.

Cash in savings accounts is guaranteed to lose value.

Spare cash that you have no need to access in the foreseeable future should be invested.

My opinion.  Others will disagree.  People who are risk averse are happy to see their money losing value at around 5% a year.

chris_the_bee

                                               

Descrabled said:

Regular Savings Strategy

I always compare ISAs with non ISAs by dividing their interest rates by 80%. A 4% ISA is the same as 5% non ISA.

Above is for a basic rate tax payer or divide by 60% if a higher rate payer.

k_man

t1redmonkey said:

twadds123 said:

just trying to plan my saving and want some understanding of why people have so many regular savers.

I guess I get it if you might require access to the cash or if the money to go into the regular savers is only generated each month.

however surely if you have a decent lump sum you don't need access to does a good fixed rate not beat the overall drip feed method?  apart from perhaps the first direct 7% saver

For example, i have a BOS regular saver @4.5% allowing £250 per month.  so £3000 in the year.

using the calculators even if i keep that money in zopa pots @3.26% drip feeding in I would make £118 interest in the year

sticking the entire £3000 in a 4.25% fix earns £127.5 on the year with no hassle.

Am i missing something?

Basically, if you have a lump sum that you don't need access to, then you are going to have 2 options when it comes to savings:

- Put it all in a fixed rate bond which guarantees you x amount of interest for the duration
- Stick it in an easy access account, and then slowly drip feed it into a variety of regular savers

Now the advantage of the fixed rate option, is you can earn an elevated amount of interest on the entire amount from day 1 (in return for sacrificing access to the money).

The advantage of the second option is you have better access to your money, however you'll probably be earning less by having to keep most of it in an easy access account, and then you can only earn the higher regular saver interest by slowly drip feeding it into the regular savers over a period of time, not from day 1 like the first option.

It depends on your own circumstances as to which is the better option.

Personally I have done a mix of the two; I put away 90% of my savings in fixed rates a few months ago so I am getting 5%+ interest on that.  But I kept about 10% of my savings in an easy access account, and I am using that amount to drip feed it into regular savers that are accessible if I find I need the money all of a sudden (remember not all regular savers are accessible).

Also the regular savers are good for the remaining money I have from my monthly wages each month that I can afford to put away.

Another advantage of EA account +drip feeding RS accounts Vs fixed rate/term, is when interest rates are rising your money isn't tied up in the fix, at what may turn out to be a low rate over time, even compared to EAs.