First Direct's 7% Savings Account

User36750

I suppose it could be worth it if I had two First Direct accounts, each with a regular saver, then it would mean ~£270 of interest, which would be better than the 2.7% on the whole of the amount with Chase.

wmb194

User36750 said:

ColdIron said:

User36750 said:

surreysaver said:

User36750 said:

Thanks all.

Not sure it's really worth it for £135ish.

But thank you for showing workings out too!

What would make it worth it?

At least £200.

Much more than £200 with the RS using the drip feed method above. But you won't, you seem to have dug your heels in

But that's OK

Someone calculated above - and it even says on the FD website - that you get ~£135 at the end of the 12 month term.
So not £200.
And no, having two or three different accounts doesn't count...

You're misunderstanding the concept of drip feeding ie. moving a lump sum from a lower paying savings account to a higher paying regular saver over time. It's the overall return that matters, not that of a single account in isolation.

User36750

ColdIron said:

User36750 said:

that would mean I'd get less in Chase interest, which is about £180 a year

But more in the RS. 7.00% is a lot more than 2.71%

Try the Drip feed option

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

But you know best

No, I don't know best... that's why I'm asking.
But then the conversation went off on different tangents as it usually does in threads. But thank you for your condecending comment anyway.

masonic

User36750 said:

I suppose it could be worth it if I had two First Direct accounts, each with a regular saver, then it would mean ~£270 of interest, which would be better than the 2.7% on the whole of the amount with Chase.

This would take double the effort.

ColdIron

Did you try the drip feed option? What did you think of the result?

User36750

wmb194 said:

User36750 said:

ColdIron said:

User36750 said:

surreysaver said:

User36750 said:

Thanks all.

Not sure it's really worth it for £135ish.

But thank you for showing workings out too!

What would make it worth it?

At least £200.

Much more than £200 with the RS using the drip feed method above. But you won't, you seem to have dug your heels in

But that's OK

Someone calculated above - and it even says on the FD website - that you get ~£135 at the end of the 12 month term.
So not £200.
And no, having two or three different accounts doesn't count...

You're misunderstanding the concept of drip feeding ie. moving a lump sum from a lower paying savings account to a higher paying regular saver over time. It's the overall return that matters, not that of a single account in isolation.

Using the calculator means that:

After 12 months your normal savings account was empty and the drip feeding stopped. By that point you'd earned...

£357 in interest
£273 from the regular saver + £84 from the normal savings account

Leaving it in normal savings

If you'd kept the cash in normal savings without drip-feeding it, you'd have earned...
£187 in interest

However, it's not as clear cut as that is it?
The overall interest from both accounts doesn't matter as we're only interested in comparing the interest from the regular saver and normal savings, which is about £100 difference.

Some may think that's worth it.
I am not so sure.
I don't like having loads of accounts with loads of different banks so opening yet another one is a bigger deal for me.  I guess some here (not you or pointing fingers) don't seem to think that for some, it IS a big deal.

masonic

User36750 said:

wmb194 said:

User36750 said:

ColdIron said:

User36750 said:

surreysaver said:

User36750 said:

Thanks all.

Not sure it's really worth it for £135ish.

But thank you for showing workings out too!

What would make it worth it?

At least £200.

Much more than £200 with the RS using the drip feed method above. But you won't, you seem to have dug your heels in

But that's OK

Someone calculated above - and it even says on the FD website - that you get ~£135 at the end of the 12 month term.
So not £200.
And no, having two or three different accounts doesn't count...

You're misunderstanding the concept of drip feeding ie. moving a lump sum from a lower paying savings account to a higher paying regular saver over time. It's the overall return that matters, not that of a single account in isolation.

Using the calculator means that:

After 12 months your normal savings account was empty and the drip feeding stopped. By that point you'd earned...

£357 in interest
£273 from the regular saver + £84 from the normal savings account

Leaving it in normal savings

If you'd kept the cash in normal savings without drip-feeding it, you'd have earned...
£187 in interest

However, it's not as clear cut as that is it?
The overall interest from both accounts doesn't matter as we're only interested in comparing the interest from the regular saver and normal savings, which is about £100 difference.

Some may think that's worth it.
I am not so sure.
I don't like having loads of accounts with loads of different banks so opening yet another one is a bigger deal for me.  I guess some here (not you or pointing fingers) don't seem to think that for some, it IS a big deal.

The difference according to your screenshot is £357 - £187 = £170, but the arguments you've been advancing against opening this account are around it being too much effort and that opening another account is too big a deal for you. If that's the case, then this isn't a good option for you, but you could have come to that conclusion without a 6 page thread discussing interest.

Band7

User36750 said:

However, I suppose a lot of this is moot point.

For example, I have £7,000.
In Chase's 2.7% account, I am getting 2.7% on that whole £7000, which is nigh on £15 a month.
If I used this money to drip into the First Direct account, that would mean I'd get less in Chase interest, which is about £180 a year (although this will go up as I continue to regularly save into it).

It's quite illogical to want to preserve the interest in a 2.7% account when you can get 7%. See the MSE dripfeeding calculator.

User36750 said:

masonic said:

User36750 said:

Administer (set up the monthly payment of £300, make sure it goes in the first time)

I suppose you've never held one, so you wouldn't know the process, but with this account First Direct sets up the monthly payment based on the amounts you specify during the application. Same with other HSBC group regular savers.

Yes, but I have to set up the monthly payment to the First Direct account

That takes about a minute, if that.

Band7

User36750 said:

ColdIron said:

User36750 said:

surreysaver said:

User36750 said:

Thanks all.

Not sure it's really worth it for £135ish.

But thank you for showing workings out too!

What would make it worth it?

At least £200.

Much more than £200 with the RS using the drip feed method above. But you won't, you seem to have dug your heels in

But that's OK

Someone calculated above - and it even says on the FD website - that you get ~£135 at the end of the 12 month term.
So not £200.
And no, having two or three different accounts doesn't count...

You are deliberately ignoring the information that has been provided for you in this thread.

But as someone already commented, it's ok if you want to stick with Chase. You're just not going to convince anyone on here that this is the smartest way of saving £7,000.

Reg_Smeeton

OP, you’ve inspired me.

Ive just opened a new FD current account from scratch, switched in another current account and applied for the 7% regular saver.

Total time (including an online chat with customer service adviser and writing this post)… 47 minutes.

That’s a £175 switch fee and (according to the FD documentation) £136.50 in interest on the RS. Easiest £311.50 I’ll ever make!