NatWest Regular Saver

nedwilsher

I have a NatWest Regular Saver into which I deposited £50 per month until it reacherd £1,000. The account is supposed to have 5.12% which is equivalent to 5% gross. So I thought the average monthly interest on £1,000 (max) would be £1,000 @ 5% / 12 = £4.17. However, over the last four months it has been £2.77; £2.77; £3.60; £3.98 (I have slightly more than £1k in the account). Either I misunderstand how the interest is calculated - or NatWest are not paying enough. Probably the former here - so where is my logic flawed? Your help appreciated.

Rattusnorvegicus

Interest is calculated on a daily basis and paid into your account on the first business day of the month.

pedrodelgado

Hi, on regular savers the actual rate over the whole year assuming you put the same amount away each month, will work out at approx half the headline rate. This is because you don't have the full end of yr amount in the account for the full 12 months. 

Herbalus

It hasn’t been 5% for the last 4 months, that’ll be why.

nedwilsher

Yep - so 5% of £1,000 is £50 per annum or 13.7p per day. So in a 31 day month interest is £4.24. That is how I worked it out. Where am I going wrong?

badger09

Herbalus said:

It hasn’t been 5% for the last 4 months, that’ll be why.

This ^^^^

I don’t have all the previous rates to hand but rate was 3.75% up to (around?) 20 September 

nedwilsher

Some further explanation needed here I suspect. I understand that the headline rate cannot be applied to a normal regular saver as the capital is building over a year. However, the NatWest Digital Regular Saver is different. Once you get to £1k interest is capped at £1k - so whether you keep saving or not you have interest at the given rate on £1k. I have had slightly over £1k for the last 4 months and have stopped adding to the account. And the app confirms it is at 5% (as is the NatWest website).

Rattusnorvegicus

Deposit Amount
£50 (monthly)
Balance after 12 months (including £600 deposited over the 12 months)
£616.57
Interest earned
£16.57

nedwilsher said:

 However, over the last four months it has been £2.77; £2.77; £3.60; £3.98 (I have slightly more than £1k in the account).

That looks right to me by my rough calculations.

nedwilsher

Rattusnorvegicus said:

Deposit Amount
£50 (monthly)
Balance after 12 months (including £600 deposited over the 12 months)
£616.57
Interest earned
£16.57

nedwilsher said:

 However, over the last four months it has been £2.77; £2.77; £3.60; £3.98 (I have slightly more than £1k in the account).

That looks right to me by my rough calculations.

That would be right if this was an ordinary regular saver. But the NatWest Digital Regular Saver is different. There is no maturity date. Once you hit £1,000 you can stop investing (as I did) and still get 5.12% AER on the £1,000. This is now like a simple savings account with 5.12% AER and I have £1,000 in it. How much interest a month should I be getting?

noh

The rate was raised to 5% on 21 September.
The first full month of 5% was October. Interest paid on the first working day of November.
The daily interest amount you have calculated is correct 13.7p a day.
You and I received £3.98 which is 29 days interest.
It appears that the period that they use for the calculation of interest is not a calendar month but is the period between the first business day of each month.
If you check the calendar you will see that between the first business day of October and that of November 29 days elapsed.

Rattusnorvegicus

https://www.natwest.com/savings/digital-regular-saver.html#box

scroll down to the "What would the estimated balance be after 12 months based on a range of deposits?"

Its their own example NOT mine.The interest is calculated daily ,and added to the account on the 1st business day of the month.

Its a compound number.... I stuck it through my compound interest calculator for 0.01369% and it came out roughly identical.