The Top Fixed Interest Savings Discussion Area

tunde10

Thanks, just to confirm if i saved £10,000 from Day 1, the annual interest will be £10,000 x 0.0615 = £615

Why do they show gross interest when applying but AER once account is opened.? Can get confusing.

refluxer

tunde10 said:

Thanks, just to confirm if i saved £10,000 from Day 1, the annual interest will be £10,000 x 0.0615 = £615

Why do they show gross interest when applying but AER once account is opened.? Can get confusing.

Yes, £10k would earn £615 in a year if the AER is 6.15%. If you're receiving interest monthly and it is paid into the same account, then the gross monthly rate will be 5.98% which works out at a return of 6.15% over the whole year (as mentioned above).

AER is just used to make comparing savings accounts easier - you'll normally get the gross rate stated against the account in online banking because that is the actual rate that's being applied to calculate your monthly interest, but occasionally you'll get both the gross and AER rates stated (Atom do this for their Fixed Savers).

 

tunde10

refluxer said:

tunde10 said:

Thanks, just to confirm if i saved £10,000 from Day 1, the annual interest will be £10,000 x 0.0615 = £615

Why do they show gross interest when applying but AER once account is opened.? Can get confusing.

Yes, £10k would earn £615 in a year if the AER is 6.15%. If you're receiving interest monthly and it is paid into the same account, then the gross monthly rate will be 5.98% which works out at a return of 6.15% over the whole year (as mentioned above).

AER is just used to make comparing savings accounts easier - you'll normally get the gross rate stated against the account in online banking because that is the actual rate that's being applied to calculate your monthly interest, but occasionally you'll get both the gross and AER rates stated (Atom do this for their Fixed Savers).

 

Thanks for explaining, makes perfect sense. Yes, it is monthly interest.

vic_sf49

refluxer said:

tunde10 said:

Thanks, just to confirm if i saved £10,000 from Day 1, the annual interest will be £10,000 x 0.0615 = £615

Why do they show gross interest when applying but AER once account is opened.? Can get confusing.

Yes, £10k would earn £615 in a year if the AER is 6.15%. If you're receiving interest monthly and it is paid into the same account, then the gross monthly rate will be 5.98% which works out at a return of 6.15% over the whole year (as mentioned above).

AER is just used to make comparing savings accounts easier - you'll normally get the gross rate stated against the account in online banking because that is the actual rate that's being applied to calculate your monthly interest, but occasionally you'll get both the gross and AER rates stated (Atom do this for their Fixed Savers).

 

Thanks for the excellent explanation. I've screencaptured that for when I'm confused in the future again... which is usually on a weekly basis. 

BooJewels

vic_sf49 said:

refluxer said:

tunde10 said:

Thanks, just to confirm if i saved £10,000 from Day 1, the annual interest will be £10,000 x 0.0615 = £615

Why do they show gross interest when applying but AER once account is opened.? Can get confusing.

Yes, £10k would earn £615 in a year if the AER is 6.15%. If you're receiving interest monthly and it is paid into the same account, then the gross monthly rate will be 5.98% which works out at a return of 6.15% over the whole year (as mentioned above).

AER is just used to make comparing savings accounts easier - you'll normally get the gross rate stated against the account in online banking because that is the actual rate that's being applied to calculate your monthly interest, but occasionally you'll get both the gross and AER rates stated (Atom do this for their Fixed Savers).

 

Thanks for the excellent explanation. I've screencaptured that for when I'm confused in the future again... which is usually on a weekly basis. 

Just to add to that - if you're getting monthly interest - what you'll actually get is 5.98% / 365 × days in the month.  So for £10k, paid in mid August you'd get £50.79 and next month (if the interest is paid into the same fix) you'd get £51.05, as you're getting interest on the principle and August's added interest.  If you get the interest paid away (as I do), then you'll just get the interest on the principle and the interest will be elsewhere to do what you want with.

So you won't get the same interest every month, it varies by the length of the month and the interest already added.

JGB1955

Just to add - the next year is 366 days... Atom work out the interest on 365... not sure about other providers!  I think Vanquish are working on 366....

clowning

I have a 1 year fixed saver with Charter which is due to mature later this month. They are offering a new 1 year fix at 6.15% interest. Can anyone tell me if they have increased their rates since last Thursday please?

Bigwheels1111

The best 1 year rate today is 6.06%.
You would be £9 per £1000 a year better off.

vic_sf49

clowning said:

I have a 1 year fixed saver with Charter which is due to mature later this month. They are offering a new 1 year fix at 6.15% interest. Can anyone tell me if they have increased their rates since last Thursday please?

Is that a loyalty bonus fixed rate?

All the rates on the money facts website, dropped from 6.1+ to 6.05 before last Thursday's BoE meeting. They haven't gone back up yet. 

soulsaver

Bigwheels1111 said:

The best 1 year rate today is 6.06%.
You would be £9 per £1000 a year better off.

You wish..