Am I better off using a regular savings account, or an account that pays interest on full amount?

dllive

Hi guys

I have a chunk of money. Would I be better using Lloyds regular saver which pays 5.35% if you pay in £400 max each month

... or ...

My Chase account which pays 2.1% on the full amount as soon as its deposited?

I cant do the maths of this.

Thanks

Band7

Regular Savers pay interest on the amount you have deposited - like any other savings account does.

5.35% is clearly a better rate than 2.1%, so the more you have at the higher rate, the more interest you get.

If you want to work out what your actual return is, use the MSE Regular Saver calculator

It will tell you that if you drip-feed £400 into the 5.25% Club Lloyds from your 2.1% Chase account, you will make an extra £81 in interest, compared with leaving your money languish in a mediocre 2.1% account. You can improve on this by moving your money from Chase into a better instant access account, and/or by using the First Direct RS alongside the Club Lloyds RS.

ColdIron

Use both and feed the Club Lloyds Regular Saver from Chase

Alter_ego

Probably better off if you use both

400ixl

Yep, put the first instalment straight into the Regular Saver (although First Direct is better than Lloyds at 7% but max £300 per month) so maybe even have both to get it into higher interest accounts quicker. Rest into the chase account moving it into the regular savers each month.

This is of course assuming you won't need access before the higher interest is paid without penalty.

dllive

Ah! Great - thanks guys, very useful. That calculator is very handy! Ill look at the First Direct account too.

(Ill probably have BOTH the First Direct and Lloyds accounts as suggested)

dllive

Hmm, Ive just checked and I dont think I can have the First Direct account becuase I dont want to switch my everyday banking to them. (I currently use Lloyds as my current account bank).

ColdIron

You don't have to switch, you could just open a 1st account for the RS, many here do

Albermarle

dllive said:

Hmm, Ive just checked and I dont think I can have the First Direct account becuase I dont want to switch my everyday banking to them. (I currently use Lloyds as my current account bank).

Yes you need to have a First Direct current account, to open the regular saver. They are offering an incentive to switch your current account to them.
Best bank accounts: Up to £200 to switch or up to 7% interest - MSE (moneysavingexpert.com)

Band7

dllive said:

Hmm, Ive just checked and I dont think I can have the First Direct account becuase I dont want to switch my everyday banking to them. (I currently use Lloyds as my current account bank).

You do NOT have to switch to FD to get access to their RS. But you do need a current account with them. They take the SO for the RS from that account, and you need it to eventually get your money out of FD again. You don’t need to use the current account for any other purpose.

You can have any number accounts, and you can apply for any current account without switching. IIRC, FD will pay you £20 for simply opening a current account with them. But they also pay £175 for switching to them, and it would be rude not to take up that offer 😎.

So what you can do is:

- open another current account at Lloyds. This should only take a couple of minutes for an existing customer

- as soon as you have the debit card for the new Lloyds account, apply for a First Direct current account. As part of your application, request for your new Lloyds account to be switched to FD

There is nothing to worry about, lots of people do this all the time. There are usually quite a few switch offers available, and many forumites have made hundreds, and some even thousands, from switching spare accounts which have been set up explicitly for switching

dllive

Thanks guys. Ive just created a RS account with Lloyds. Because Im an existing Lloyds Club customer it was literally just 2 clicks of a button.

Im ashamed to say Ive never had a current account with any other bank than my Lloyds account which I opened 30+ years ago(!!). So Im very ignorant of how they work. I always assumed they made you have at least 2 direct debits/standing orders.

I like the idea of creating another Lloyds current account; then transfer to FD. very canny! (surely they would have closed that loophole!)