Halifax Reward Account changing to £3 charge with “lifestyle rewards”

where_are_we

Next step - " We will contact you before the end of the Offer period, either by writing to you or, if you have agreed, by sending you an email or text message, to tell you what will happen next". End of offer period being 15th May - I presume.

"Patience is a virtue"!

chels

I took the offer period to mean the 12 months for your chosen reward? 

JustAnotherSaver

As i leave this lastminute dot com to decide on what i'm doing i thought i'd run the figures.

I used https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

So somewhere in this haystack i asked about the monthly reward being converted to an interest equivalent and i was told 1.2%, or at least i think i was told 1.2%. 1.2% sticks in my mind for something anyway.

So using that link, you need to have £5000 in the account for the month and not a penny less. The percentage that generated £5 was 0.1%.

That's not 1.2% to me, so what gives?

chels

0.1% gives an annual return of £5.00 but the return would be £60.00 for the year (assuming conditions are met) which equates to an interest rate of 1.20%.

colsten

JustAnotherSaver said:

So using that link, you need to have £5000 in the account for the month and not a penny less. The percentage that generated £5 was 0.1%.

That's not 1.2% to me, so what gives?

#LogicFail

The 1.2% is AER (Annual Equivalent Rate).
You don't get £5 per annum, but £60. Roughly the same amount you'd get on £5K from a 1-year 1.2% AER fixed rate bond.

You could, of course, put your £5K into a 1-year 1.65% AER fixed rate bond tonight, and get £82.50 at the end of the year.......albeit you wouldn't have the option to bail out during the year, as you have with the Halifax

JustAnotherSaver

I’m about to leave for work so short & sweet-
did you click the link?

i set the results to provide monthly results, not yearly. Since the £5 is awarded monthly. 

So it was 0.1% for the month to give £5 over the course of the month with was selected in the drop down box as the default was year. 

I may may not be able to work out this interest lark but even I know £5 per month over 12 months is £60. 

masonic

JustAnotherSaver said:

i set the results to provide monthly results, not yearly. Since the £5 is awarded monthly. 
So it was 0.1% for the month to give £5 over the course of the month with was selected in the drop down box as the default was year.

So you've established the rate is 0.1% per month.

JustAnotherSaver said:

So using that link, you need to have £5000 in the account for the month and not a penny less. The percentage that generated £5 was 0.1%.

That's not 1.2% to me, so what gives?

Hopefully you can now see it is 1.2% per year. Most people don't use monthly interest rates, they use annual rates. So to have a conversation with anyone else, you'd need to convert the monthly rate you've calculated to an annual rate. As mentioned above, in this case you can do that simply by multiplying by 12.

Also, be aware your "compound interest calculator" is inappropriate for use for this account. There is no compounding of interest.

HTH

surreysaver

Or if its 0.1% for a month, to get the annual rate, as there's twelve months in a year, multiply 0.1 by 12, and, hey presto, you get 1.2!

JustAnotherSaver

Oh right I’m with you now. I thought if the rate was 1.2% then it’d be 1.2% each month, not a twelfth of it. 

So so if you had 12% interest rate then you wouldn’t get 12% each month, you only get 1% for a total of 12%?

colsten

JustAnotherSaver said:

Oh right I’m with you now. I thought if the rate was 1.2% then it’d be 1.2% each month, not a twelfth of it. 

So so if you had 12% interest rate then you wouldn’t get 12% each month, you only get 1% for a total of 12%?

Surely, JustAnotherSaver with 4.8K MSE posts knows all this, anyway, and is just having a bit of a laugh, but here goes:

Interest rates for savings are always expressed as AER.
Interest rates for loans are always expressed as APR.
Where A in both cases stands for annual.