Withdrawing Savings and Interest

ItchyCat

I have a Lloyds basic savings account, purely because Lloyds is the only bank that still has a branch locally to me and it’s where I chuck my saved coins. The interest rate is appalling. I want to move the majority of it over to premium bonds but I’m just wondering how the interest is calculated. It is paid at the end of December, so if I move 5k, leaving a thousand in there, will they pay interest for the 10 months of having 6k, or will they just pay interest on the money still in the account at the end of the year? 

El_Torro

Interest is typically calculated daily. Having a quick look on the Lloyds website I can’t actually find anything that confirms this though. If you’re really concerned about it then you can ring them and ask, or read the T’s and C’s of the account.

Are you earning 0.01% interest? Or do you have a Club Lloyds Saver with 0.05% interest?  Either way you’re right in saying that the interest rate is appalling.

Aretnap

Having a defunct and empty Lloyd's saver accounts in which a few Pence of interest one turned up at a seemingly random moment after I'd emptied it, I'm fairly sure it will be calculated daily but paid annually - ie in December you'll get credited with interest for the 10 months the money was actually in your account.

However even in the unlikely event they did only pay interest on the balance that was actually in your account in December, at 0.01% you would still be better off withdrawing the money now and forgoing the 50p or so of interest for the year - two months of interest in a market leading savings account will more than compensate for the lost 50p.

refluxer

You should get paid interest as if you had £5k in for 10 months and £1k in for 2 months, just as you mentioned. I've never had a standard bank or savings account that's worked in any other way, at least.

But, either way - the amounts are so small that I would concentrate on getting your Premium Bonds bought ASAP instead - they need to be bought before the end of October to qualify for the December draw.

ItchyCat

Thanks all.  

You are right…it is a few pennies. I’ll get the premium bonds bought.