Regular savings account or not

yorkshireOAP

Hi,

For the last 8 months I have been paying £250/month into FD regular saver, 3.5%, but we all know the accrued sum at the end of the 12 month term is nearer 1.9%.

Should I now take the funds out, probably at 0.5%? and move to my Marcus account to get better interest or stick with it till April/May?

ColdIron

You are getting 3.50% on every pound of the money deposited. Why would you move money from an account paying 3.50% to one paying 2.50%?

Are you sure you know how regular savers work?

eskbanker

yorkshireOAP said:

For the last 8 months I have been paying £250/month into FD regular saver, 3.5%, but we all know the accrued sum at the end of the 12 month term is nearer 1.9%.

We don't all know that as it isn't true!  The interest is accrued at the stated AER of 3.5%, and the fact that it may equate to about 1.9% of the final balance (much of which won't have been in the account for the year) is misleading.

Any money that you have in there now will be earning 3.5% (pro rata) until maturity, whereas if you move it to an account where it would earn a lower rate then you'd obviously lose out....

Millyonare

Reduce the monthly First Direct payments to zero (or the lowest possible) and open a Lloyds Club monthly saver paying a much-higher 5.25%.

refluxer

yorkshireOAP said:

Hi,

For the last 8 months I have been paying £250/month into FD regular saver, 3.5%, but we all know the accrued sum at the end of the 12 month term is nearer 1.9%.

Should I now take the funds out, probably at 0.5%? and move to my Marcus account to get better interest or stick with it till April/May?

Your final £3,000 will have only earned ~1.9% overall if you have a £3,000 lump sum sat in a current/savings account (at or near 0%) at the start and pay £250/month into the regular saver. 

In that type of scenario, it makes sense to 'drip feed' your lump sum from a suitable account paying a higher rate of interest. This could either be done automatically from a higher-paying current or savings account that allows regular payments/standing orders or manually from any high interest savings account (which allows unlimited withdrawals) via your current account.

phillw

The money in the regular saver is earning 3.5%, its the money that isn't in the regular saver that you need to worry about

If you want the best interest then £5000 in Barclay's rainy day saver for 5% and max out natwest, rbs, club lloyd's, lloyd's, halifax, bank of scotland and principality (christmas) regular savers for between 4.5 and 5.25%

Ideally you want 2 direct debits paid out of Barclay's, NatWest and rbs, for a total of 6 direct debits and you also need to transfer money through Barclay's, NatWest, Lloyd's and rbs.

For easy access, I use a combination of all rayan 2.84% and Santander 2.75% esaver.

I'm not sure I'd bother opening one now, but I'd keep the first direct one going at the moment if you can afford it, it still beats easy access.