Lloyds monthly saver offering me 4.5% AER/GROSS - Am i better off with Santander @ 2.72 AER?

stylus360

Hi

just logged in to open lloyds 5.25% monthly save max £400 month.

As i'm an existing customer i had log in and it offered me 4.5% AER/GROSS, max £250 month, in their example it gives £3067.50, so profit of £67.50.

BUT if i just keep £3000 in my Santander E-Saver @ 2.72 AER (monthly interest) i will get £81.60.

So how can the AER be higher with lloyds but i will get more if i just leave it in Santander?

Cheers

Sea_Shell

Try thinking of each £ individually.

What's the highest % of interest that £ can earn today?

RobM99

That's because with Santander, the interest is on the whole amount. With the regular saver you get interest on £400 for the 1st month, £800 the second and so on.

So do the Lloyds one anyway.

orange-juice

Their example probably assumes you're paying in 250 per month and starting from 0. Whereas your Santander example is based on you saving 3000 from day 1.

If you transfer in 250 from your Santander savings into the Lloyds account each month, your total interest will be higher after 12 months.

Play about with the regular savings calculator -

https://www.moneysavingexpert.com/savings/regular-savings-calculator/

ColdIron

You are better off with both. Try the RS Calculator with the drip feed lump sum option

https://www.moneysavingexpert.com/savings/regular-savings-calculator

t1redmonkey

Santander is giving you those figures based on a £3k deposit on day 1, so you have £3k in the account for an entire year.

Whereas with regular savers, you only have the first month's deposit in for a whole year, each payment after that is in there for a decreasing amount of time (11 months, 10 months etc.).

So in the examples they have to give you, it looks like the Santander account is better on the surface, but you're actually earning more interest per day in the regular saver.

Millyonare

* Santander = 365 days of interest on 100% of your cash
* Lloyds = 30 days of interest on 8% + 30 days on 8% (repeat for 12 months)

jimexbox

In being offered 5.25% AER, upto £400 month. 

ColdIron

Presumably you have a Club Lloyds current account, the OP may only have a Classic or other non qualifying account

AndyTh_2

jimexbox said:

In being offered 5.25% AER, upto £400 month. 

and I've opened both

jimexbox

AndyTh_2 said:

jimexbox said:

In being offered 5.25% AER, upto £400 month. 

and I've opened both

I didn't even scroll that far down, I'll open both too.