Am I being screwed by my bank?

Otuama

Hi all.

Firstly, I'm mainly posting this out of ignorance so please bear with me with this.  I don't have a head for numbers and all these percentage rates hurts my head.  In fact, even though I love Martin Lewis, I do wish he'd slow down .

I was watching Martin Lewis' Money Show and he went into savings & that we're being diddled if we have a savings interest of less than 1%.

I'm going to go into my financials a bit here and I'm hoping you can confirm my workings out or if I'm losing my head.

I currently have a savings account of £10,513.

I see my monthly interest change each month.  Probably because I've had to dip into it for the last couple of months.

Here's my interest for the last few months.  The dates are the reference in the payment.

Sept/Oct = £2.48

1st Aug/31st Aug = £0.16

1st Jul/31st Jul = £0.16

1st Jun/30th Jun = £0.16

3 May/31st May = £0.15

For Period to 2nd May = £0.02

Interest Paid Gross (28th Apr) = £5.21

1 Mar / 31st Mar = £5.61

1 Feb / 28th Feb = £2.92

I'm unsure what interest rate this account is on but using a Bank of England calculator ( I can't post links because I'm new but it's the borrowing-savings-calculator )  I think I've worked out that my recent rate is  0.28%

I worked this out by putting my balance in and changing the % until the 'monthly earnings' matched £2.48

Again, I'm not sure if this is the correct - or accurate way to go about it.

BUT.

On the MSE site there's a bank called Aldermore offering 2.75%

Using the same process above, that'd mean I'd get £24/month.

That can't be right, can it?

I've been with Barclays for 30 years so don't want to go putting my money somewhere else until I'm sure I can trust it.

--------------

Does anyone have any advice?  And please, keep it simple

Thanks,

Sean

MovingForwards

You're not being s-wed by your bank, you've just not looked for a better account.

Have a good read through this section:
https://forums.moneysavingexpert.com/categories/savings-investments

and pick a better account.

cymruchris

There are a number of reputable instant access savings accounts that are now paying 2.75% or more - based on your current savings - that would indeed bring you an interest payment of over £24 a month. Don't hang about - move your money asap so you benefit from a better rate. 

Otuama

Thanks both.

I'm considering spreading my savings across probably max 3 banks.  

For example:

Barclays Rainy Day Saver is 5.12% (up to £5000) - allows unlimited withdrawals
Aldermore is 2.75%  - allows unlimited withdrawals
RCI Bank is 4.85% - Two year fixed

RCI says 'unlimited top-up for the first 14 days.  I assume that means that I can't add to this account (after 14 days) so after that time I just forget about it for 2 years.  So based on me adding £3000 I can expect an interest return of about £290.

It makes me wonder whether it's worth it and if I'd have better gains with just spreading the savings between Barclays and Aldermore....... or using something other than a fixed account.

------

I read/heard somewhere that opening multiple accounts can affect your credit score or mortgage lenders don't really like it.

Yes MSE suggests doing it.

Does anyone have any views on this?  At the moment a mortgage for a place is a bit of a pipe dream so may not be much of an issue.

droopsnoot

Does the savings account you currently have pay less interest in months where you make a withdrawal? That might explain the fluctuations. I've had them in the past where you get a certain rate for no withdrawals and it drops if you start to take cash out.

dave2319

Otuama said:

It makes me wonder whether it's worth it and if I'd have better gains with just spreading the savings between Barclays and Aldermore....... or using something other than a fixed account.

That fixed account at RCI offers a much better rate than Aldermore, so you'd get better gains by having at least some money at RCI, but the key question is: how much are you prepared to lock away for 2 years?

I would work that out first, then allocate up to 5k to put in the Barclays Rainy Day Saver, and if you've still got some left then put that in Aldermore.

That's just from the options you mentioned though, and it's obviously important to read the terms carefully and make sure you qualify for things like the Barclays Blue Rewards, which seems to be necessary in order to take advantage of their Rainy Day Saver. Also, there's a Savings & Investments area of the forum here: https://forums.moneysavingexpert.com/categories/savings-investments

RobM99

It's a confusing thing for sure. Friend of mine had £27,000 in a 0% current account! Grr! Now moved to a better (couldn't be worse) savings account.

To put it simply, a bank won't look after your savings, you have to do it (as we all do).

Examples (just to keep numbers easy and illustrate a point);

Your £10,000 could earn 4% p.a. - £400 a year or £33.33 a month. Not 16p which you were. Actual figures now;

Your £10,513 could earn 4.35%   - £457 a year or £38.09 a month.  No tax.

Bridlington1

Otuama said:

Thanks both.

I'm considering spreading my savings across probably max 3 banks.  

For example:

Barclays Rainy Day Saver is 5.12% (up to £5000) - allows unlimited withdrawals
Aldermore is 2.75%  - allows unlimited withdrawals
RCI Bank is 4.85% - Two year fixed

RCI says 'unlimited top-up for the first 14 days.  I assume that means that I can't add to this account (after 14 days) so after that time I just forget about it for 2 years.  So based on me adding £3000 I can expect an interest return of about £290.

It makes me wonder whether it's worth it and if I'd have better gains with just spreading the savings between Barclays and Aldermore....... or using something other than a fixed account.

------

I read/heard somewhere that opening multiple accounts can affect your credit score or mortgage lenders don't really like it.

Yes MSE suggests doing it.

Does anyone have any views on this?  At the moment a mortgage for a place is a bit of a pipe dream so may not be much of an issue.

The only real impact opening lots of current accounts has on your credit report is that they leave hard searches on your report. These drop off after 6-12 months so if you won't be getting a mortgage in 2023, it will have very little impact on mortgage eligibility. Even then savings accounts do not appear on credit reports so will have no impact whatsoever. I've opened nearly 100 savings accounts this year alone and it's had no impact.

lindos90

Opening a Coventry BS savings account could earn you over £27 a month, their rate is going up to 3.25% on 6th Jan. I've just persuaded my lad to get one, as he's saving for a house deposit and it's all in his current account in Lloyds earning nothing. Opening one myself too and moving my premium bond money into it. It does have restrictions, as you can only withdraw 6 times a year without penalty. (50 days interest)

Hermann

lindos90 said:

Opening a Coventry BS savings account could earn you over £27 a month, their rate is going up to 3.25% on 6th Jan. I've just persuaded my lad to get one, as he's saving for a house deposit and it's all in his current account in Lloyds earning nothing. Opening one myself too and moving my premium bond money into it. It does have restrictions, as you can only withdraw 6 times a year without penalty. (50 days interest)

Anyone who is definitely saving for a house deposit should look at a Lifetime ISA, that will give an added bonus.

See here... https://www.moneysavingexpert.com/savings/lifetime-isas/?_ga=2.64781352.649100478.1673006564-441804136.1645727166&_gl=1*w6qouo*_ga*NDQxODA0MTM2LjE2NDU3MjcxNjY.*_ga_X74CWQS9F0*MTY3MzAwNjU2My43OS4xLjE2NzMwMDY5ODkuOS4wLjA.