TSB Monthly Saver still 2%

colsten

soulsaver said:

clivep said:

Opened TSB, Lloyds & BOS 2% ones yesterday.

Already have HBOS, HBSC, First Direct, M&S, Santander and Club Lloyds ones currently paying better rates.

Hi Clive Who is BOS if you don't mean Halifax BOS? 

Both BOS and Halifax have a 2% monthly saver, with almost exactly the same T&Cs. Just the account and bank names are different. So you can have 2 concurrent monthly savers in HBOS.

RolandFlagg

MSE have a regular saver calculator.
Just for my own calculations I did this:
I have £3250 in a Marcus account paying 1.2%.
I want to move £250 of that money to the TSB RS paying 2% every month for 13 months.
So at the end of 13 months I have nothing in Marcus and £3250 in TSB RS.
The results were:

After drip-feeding the cash for 13 months...

Total interest earned: £54
£16 from the normal savings & £38 in the regular saver.

If you'd kept the money only in the normal savings account you'd have earned £36 in interest.

So I made an extra £18.

bowlhead99

soulsaver said:

clivep said:

Opened TSB, Lloyds & BOS 2% ones yesterday.

Already have HBOS, HBSC, First Direct, M&S, Santander and Club Lloyds ones currently paying better rates.

Hi Clive Who is BOS if you don't mean Halifax BOS? 

BOS is Bank of Scotland

HBOS stands for the group of banks from the Halifax / Bank of Scotland group (which are part of Lloyds these days but have their own banking license) and he put that acronym instead of HSBC which is what he had meant...

MACKEM99

RG2015 said:

MACKEM99 said:

MACKEM99 said:

clivep said:

MACKEM99 said:

george4064 said:

Slightly depressing to see we're now after 2.0% regular savers!

Which of course is really 1%.

Which of course is actually 2.0% AER, the meaningful interest rate.

clivep said:

MACKEM99 said:

george4064 said:

Slightly depressing to see we're now after 2.0% regular savers!

Which of course is really 1%.

Which of course is actually 2.0% AER, the meaningful interest rate.

clivep said:

MACKEM99 said:

george4064 said:

Slightly depressing to see we're now after 2.0% regular savers!

Which of course is really 1%.

Which of course is actually 2.0% AER, the meaningful interest rate.
Yes for the amount you put in for 12 months.  Then 11/12th of 2% for next month and so on till the last month is 1/12 of 2%.  Unless I am missing something?

So if you add up 2%, 11/12 of 2%, 10/12 of 2% all the way down to 1/12 of 2% and then divide the total by 12 you are getting 1%.

What about the 11 months worth of interest you are getting before it goes into the regular saver account? This could be earning interest in an easy access account.

"could" is the important word.

MACKEM99

ColdIron said:

MACKEM99 said:

So if you add up 2%, 11/12 of 2%, 10/12 of 2% all the way down to 1/12 of 2% and then divide the total by 12 you are getting 1%.

You're not the first, and won't be the last, to make this mistake. It comes up regularly. Every pound you put in will be earning 2.00% AER but not every pound will be there for a year. Rather than thinking that you are getting a lower rate than they are actually paying you it is more helpful to think of it in terms of the advertised rate multiplied by the average balance as that is the reality of what is happening

If you want a quick ready reckoner try this - the monthly deposit * the rate * 6.5

So for TSB this would be 250 * 0.02 * 6.5 = £32.50

There are also lots of people who see 2% and think that is what it achieves.  As you have said "every pound you have put it will be earning 2%, but not every pound will be in there for a year" so not every pound achieves 2% unless it is in the account for a full year. 1/12 of it achieves 1.83% down to the last 1 month which achieves 0.2%.  I understand that if the account carries on more than a year then any amount of course it will get 2% once it is in for a full year.  However if the account is only open for one year then my rule applies.  Of course then there is the matter of dropping rates over time.

schiff

Every pound that you deposit earns interest at 2% for the length of time that it is in the account.
Incontrovertible fact.

IanManc

MACKEM99 said:

ColdIron said:

MACKEM99 said:

So if you add up 2%, 11/12 of 2%, 10/12 of 2% all the way down to 1/12 of 2% and then divide the total by 12 you are getting 1%.

You're not the first, and won't be the last, to make this mistake. It comes up regularly. Every pound you put in will be earning 2.00% AER but not every pound will be there for a year. Rather than thinking that you are getting a lower rate than they are actually paying you it is more helpful to think of it in terms of the advertised rate multiplied by the average balance as that is the reality of what is happening

If you want a quick ready reckoner try this - the monthly deposit * the rate * 6.5

So for TSB this would be 250 * 0.02 * 6.5 = £32.50

There are also lots of people who see 2% and think that is what it achieves.  As you have said "every pound you have put it will be earning 2%, but not every pound will be in there for a year" so not every pound achieves 2% unless it is in the account for a full year. 1/12 of it achieves 1.83% down to the last 1 month which achieves 0.2%.  I understand that if the account carries on more than a year then any amount of course it will get 2% once it is in for a full year.  However if the account is only open for one year then my rule applies.  Of course then there is the matter of dropping rates over time.

Your "rule" doesn't exist.

Money in regular savers earns interest for the time it is in the account, just like any other interest bearing account.

It isn't a difficult concept to grasp.

ColdIron

Everybody is entitled to be wrong

soulsaver

colsten said:

soulsaver said:

clivep said:

Opened TSB, Lloyds & BOS 2% ones yesterday.

Already have HBOS, HBSC, First Direct, M&S, Santander and Club Lloyds ones currently paying better rates.

Hi Clive Who is BOS if you don't mean Halifax BOS? 

Both BOS and Halifax have a 2% monthly saver, with almost exactly the same T&Cs. Just the account and bank names are different. So you can have 2 concurrent monthly savers in HBOS.

I know, I have them both. I call BoS 'HBoS'. His follow on comments just put some doubt in my mind if he was reffing to RBS and a clandestine RS that I didn't have. 

glider3560

MACKEM99 said:

ColdIron said:

MACKEM99 said:

So if you add up 2%, 11/12 of 2%, 10/12 of 2% all the way down to 1/12 of 2% and then divide the total by 12 you are getting 1%.

You're not the first, and won't be the last, to make this mistake. It comes up regularly. Every pound you put in will be earning 2.00% AER but not every pound will be there for a year. Rather than thinking that you are getting a lower rate than they are actually paying you it is more helpful to think of it in terms of the advertised rate multiplied by the average balance as that is the reality of what is happening

If you want a quick ready reckoner try this - the monthly deposit * the rate * 6.5

So for TSB this would be 250 * 0.02 * 6.5 = £32.50

There are also lots of people who see 2% and think that is what it achieves.  As you have said "every pound you have put it will be earning 2%, but not every pound will be in there for a year" so not every pound achieves 2% unless it is in the account for a full year. 1/12 of it achieves 1.83% down to the last 1 month which achieves 0.2%.  I understand that if the account carries on more than a year then any amount of course it will get 2% once it is in for a full year.  However if the account is only open for one year then my rule applies.  Of course then there is the matter of dropping rates over time.

You could apply this "rule" to any account.  To give an extreme example, Marcus currently pays 1.2%.  If I pay in £1 today, then £10,000 in 364 days time, in 365 days time, I will have earnt 34p interest (0.0034% of the final balance).

Same if I were to pay in equal amounts each month, I'd only get roughly 0.6% of the final balance.

As with all accounts, you only earn money on the balance each day, not the final balance.