Digital Saver Interest Rate

Listless_2

I’m a bit confused and need some help. Called the bank but the agent didn’t have a clue.

I pay 150 into a digital saver account with RBS. The advertised interest rate is 3.25% for the first 1000. After two months of paying in the full 150 my interest for the end of month two was 0.74p. How exactly is that anywhere close to 3.25% of £300? 

What am I missing here? 

Descrabled

Interest rate is 3.25% per annum. Interest rate is added each month.

£300 in the account for the whole month of June would be:

300*3.25/100*30/365=0.8 or 80p.  30 days in June, 365 days in a year

If you didn't pay in the last £150 on the 1st June it would be less than 80p.

Pay in the £150 on 6th June would be 74p

I always remove my interest from the account on the 1st banking day of the month, before RBS have added the interest using this formula and the interest has always matched my calculation.

TheWoodler

It’s cumulative. The 1st month you only have 3.25% on £150, then 3.25% on £300, and so on. 

See point 5 on MSE’s regular savings need-to-knows link here: https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/

RG2015

Descrabled said:

Interest rate is 3.25% per annum. Interest rate is added each month.

£300 in the account for the whole month of June would be:

300*3.25/100*30/365=0.8 or 80p.  30 days in June, 365 days in a year

If you didn't pay in the last £150 on the 1st June it would be less than 80p.

Pay in the £150 on 6th June would be 74p

I always remove my interest from the account on the 1st banking day of the month, before RBS have added the interest using this formula and the interest has always matched my calculation.

I assume that you already have £1,000 in the account. Otherwise, removing the interest means you would lose the interest on the interest.

I say this just to ensure that the OP is not further confused.

Daliah

TheWoodler said:

It’s cumulative. The 1st month you only have 3.25% on £150, then 3.25% on £300, and so on. 

That’s not quite how it works. Interest is calculated daily, on the balance in the account and the length of time the money is in the account

Balance * (interest rate / 365) * number of days in account

MichaelAP

For those who do not have the £1000 already in the Digital Saver, there is a way to accrue interest on the full £1000 for a few days.
To explain:- I opened a Digital Saver account with £150. I then transferred £850 into said account as I wanted to see what actually happens. This remained for four days and was then transferred back as an overpayment.
However, I received those four days of interest at the 3.25%.
So, if you boxed clever and transferred up to the max £1000, although it will be placed back as overpayment you still receive the 3.25% interest for the days it remains in the Digital Saver.

george4064

MichaelAP said:

For those who do not have the £1000 already in the Digital Saver, there is a way to accrue interest on the full £1000 for a few days.
To explain:- I opened a Digital Saver account with £150. I then transferred £850 into said account as I wanted to see what actually happens. This remained for four days and was then transferred back as an overpayment.
However, I received those four days of interest at the 3.25%.
So, if you boxed clever and transferred up to the max £1000, although it will be placed back as overpayment you still receive the 3.25% interest for the days it remains in the Digital Saver.

I wouldn't speak too soon, they might deduct that interest earned in the future!

refluxer

The extra interest earned for those first 4 days would be 30p Hats off for thinking outside the box though !

Daliah

MichaelAP said:

For those who do not have the £1000 already in the Digital Saver, there is a way to accrue interest on the full £1000 for a few days.
To explain:- I opened a Digital Saver account with £150. I then transferred £850 into said account as I wanted to see what actually happens. This remained for four days and was then transferred back as an overpayment.
However, I received those four days of interest at the 3.25%.
So, if you boxed clever and transferred up to the max £1000, although it will be placed back as overpayment you still receive the 3.25% interest for the days it remains in the Digital Saver.

It's quite silly to do this, for two reasons

1. you can only make pennies
   
   
2. if you persist, you will most likely get all your accounts closed for repeated abuse of facility

Bridlington1

MichaelAP said:

For those who do not have the £1000 already in the Digital Saver, there is a way to accrue interest on the full £1000 for a few days.
To explain:- I opened a Digital Saver account with £150. I then transferred £850 into said account as I wanted to see what actually happens. This remained for four days and was then transferred back as an overpayment.
However, I received those four days of interest at the 3.25%.
So, if you boxed clever and transferred up to the max £1000, although it will be placed back as overpayment you still receive the 3.25% interest for the days it remains in the Digital Saver.

Another way to fill up the digital saver is to use the double round ups. Make your first £150 deposit as normal then open a savings account that lets you make deposits by debit card and make hundreds of £1.01 deposits into it. Each deposit results in £1.98 being rounded up into the digital saver. Natwest/RBS have a limit of 100 debit card payments per day so you can fill the digital saver in 5 days using this method.

wiseonesomeofthetime

From RBS website:

You can only pay up to £150 into the account each calendar month. This includes your standing order and any extra money you put in. Round Ups won't count towards your monthly £150 limit. Any amount over this limit may be automatically moved to your current account. If you repeatedly try to pay more than £150 each month into the account, you will be given 60 days’ notice to close the account.


Bold emphasis mine.