One year fixed savings - monthly interest. MSE mistake or not??

Morphboy

Hi guys. Can someone confirm whether the advice on the savers page is wrong about this? It says that monthly interest is 'useful for those who want their savings to provide a regular income' but it's a one year fix so I thought you couldn't withdraw the interest? 

refluxer

It's a one year fixed rate with the option to pay interest away monthly to an external account - not all providers offer this option, which is why MSE have highlighted it.

From the fixed rate accounts summary box...

"You can choose to have your interest paid to your Fixed Rate Account, any other Personal Savings account you hold with us that allows deposits, or your nominated UK bank or building society account."

It's worth noting that you'd only achieve the gross monthly interest rate if you did this (rather than AER) which would be 4.27%

[Deleted User]

Hi,

you can get interest monthly, but not withdraw money.

JGB1955

You'll be able to have the interest paid monthly into your linked bank account, just not able to withdraw the original capital.

Morphboy

JGB1955 said:

You'll be able to have the interest paid monthly into your linked bank account, just not able to withdraw the original capital.

Ah right. Interesting. Won't that prevent compounding and result in a lower AER?

Morphboy

refluxer said:

It's a one year fixed rate with the option to pay interest away monthly to an external account - not all providers offer this option, which is why MSE have highlighted it.

From the fixed rate accounts summary box...

"You can choose to have your interest paid to your Fixed Rate Account, any other Personal Savings account you hold with us that allows deposits, or your nominated UK bank or building society account."

It's worth noting that you'd only achieve the gross monthly interest rate if you did this (rather than AER) which would be 4.27%

Ah that's absolutely brilliant. Thank you.

t1redmonkey

Morphboy said:

JGB1955 said:

You'll be able to have the interest paid monthly into your linked bank account, just not able to withdraw the original capital.

Ah right. Interesting. Won't that prevent compounding and result in a lower AER?

Might do, but there might be better interest rates out there when some of the interest is paid so you can take that interest and get it earning a higher % in another account

Morphboy

t1redmonkey said:

Morphboy said:

JGB1955 said:

You'll be able to have the interest paid monthly into your linked bank account, just not able to withdraw the original capital.

Ah right. Interesting. Won't that prevent compounding and result in a lower AER?

Might do, but there might be better interest rates out there when some of the interest is paid so you can take that interest and get it earning a higher % in another account

Nice one. Thanks for the advice.

JGB1955

t1redmonkey said:

Morphboy said:

JGB1955 said:

You'll be able to have the interest paid monthly into your linked bank account, just not able to withdraw the original capital.

Ah right. Interesting. Won't that prevent compounding and result in a lower AER?

Might do, but there might be better interest rates out there when some of the interest is paid so you can take that interest and get it earning a higher % in another account

That's what I'm doing with a couple of Fixed Rate Paragon accounts I have.  They're currently paying a derisory 1.2% and 0.7%.  I'm having the interest paid monthly and then re-investing it at 3%+.

Notepad_Phil

t1redmonkey said:

Morphboy said:

JGB1955 said:

You'll be able to have the interest paid monthly into your linked bank account, just not able to withdraw the original capital.

Ah right. Interesting. Won't that prevent compounding and result in a lower AER?

Might do, but there might be better interest rates out there when some of the interest is paid so you can take that interest and get it earning a higher % in another account

Monthly interest may also be of use to people who would like the interest to be paid across two tax years so that they don't exceed the £1000 personal savings allowance in either of the tax years (or at least minimise the tax they will have to pay by only exceeding it in one of them).

---- edit to mention that higher rate tax payers only get a £500 allowance whilst additional rate tax payers don't get one at all.