LLoyds ups rate to 6.25% on Club LLoyds

MisterMotivated

35har1old said:

Band7 said:

soulsaver said:

Bridlington1 said:

I'm not trying to be pedantic here but how can anyone have had the 5.25% Club Lloyds monthly saver for 6 months? They launched those rates around mid October so the most anyone could have had them for is around 4 1/2 months.

It doesn't make much difference in the case of the Club Lloyds monthly saver as you'd still likely be better off staying put at 5.25% but for the BOS monthly saver it just about tips the balance in favour of renewing for the better rate in my case.

They could have 6 payments,£2.4k in it: 16 October 1st of N D J F M

Yes exactly, as of March 1, I have £2,400 in my Club Lloyds account. 

How are losing anything when you are getting paid the interest now and you would have the same problem finding a home for £4800 in 6 months time

Because you can't just renew the account and keep the balance you previously had; instead you have to spend the next 6 months with the average RS balance approaching £1,200 rather than £2,400 (half final balances used for simplicity).

Conversely to your question, how would I be better off starting again at the higher rate today?

masonic

Sea_Shell said:

masonic said:

Bridlington1 said:

soulsaver said:

Bridlington1 said:

I'm not trying to be pedantic here but how can anyone have had the 5.25% Club Lloyds monthly saver for 6 months? They launched those rates around mid October so the most anyone could have had them for is around 4 1/2 months.

It doesn't make much difference in the case of the Club Lloyds monthly saver as you'd still likely be better off staying put at 5.25% but for the BOS monthly saver it just about tips the balance in favour of renewing for the better rate in my case.

They could have 6 payments,£2.4k in it: 16 October 1st of N D J F M

I'm not denying that you can have 6 payments in by now (I am living proof of that) but that's still not the same as having the account open for 6 months.

If it was someone could have opened the account on 28th Feb made a deposit there and then and then funded it again on 1st of March. They would have made 2 payments into the account as of 1st March but they wouldn't have had the account for 2 months would they?

Most people won't remember the date they opened their account, so are using the balance as a guide. The number of months is just being used as a proxy for the balance in the preceding discussion anyway.

I'd guess most of us here are "rate chasers", so will have probably maxed out our monthly contributions to Regular Savers.

Perhaps I'm in the minority then, as I use them a little differently. I spread out my applications over the calendar year such that I am never more than a couple of months from having one mature. This way I can keep a float of cash saved continuously across these accounts. A consequence is that when a new one comes up, I often need to wait a while before slotting it in, always of course prioritising the best of those I don't already hold.

Sea_Shell

masonic said:

Sea_Shell said:

masonic said:

Bridlington1 said:

soulsaver said:

Bridlington1 said:

I'm not trying to be pedantic here but how can anyone have had the 5.25% Club Lloyds monthly saver for 6 months? They launched those rates around mid October so the most anyone could have had them for is around 4 1/2 months.

It doesn't make much difference in the case of the Club Lloyds monthly saver as you'd still likely be better off staying put at 5.25% but for the BOS monthly saver it just about tips the balance in favour of renewing for the better rate in my case.

They could have 6 payments,£2.4k in it: 16 October 1st of N D J F M

I'm not denying that you can have 6 payments in by now (I am living proof of that) but that's still not the same as having the account open for 6 months.

If it was someone could have opened the account on 28th Feb made a deposit there and then and then funded it again on 1st of March. They would have made 2 payments into the account as of 1st March but they wouldn't have had the account for 2 months would they?

Most people won't remember the date they opened their account, so are using the balance as a guide. The number of months is just being used as a proxy for the balance in the preceding discussion anyway.

I'd guess most of us here are "rate chasers", so will have probably maxed out our monthly contributions to Regular Savers.

Perhaps I'm in the minority then, as I use them a little differently. I spread out my applications over the calendar year such that I am never more than a couple of months from having one mature. This way I can keep a float of cash saved continuously across these accounts. A consequence is that when a new one comes up, I often need to wait a while before slotting it in, always of course prioritising the best of those I don't already hold.

But do you max them out once opened?

masonic

Sea_Shell said:

masonic said:

Sea_Shell said:

masonic said:

Bridlington1 said:

soulsaver said:

Bridlington1 said:

I'm not trying to be pedantic here but how can anyone have had the 5.25% Club Lloyds monthly saver for 6 months? They launched those rates around mid October so the most anyone could have had them for is around 4 1/2 months.

It doesn't make much difference in the case of the Club Lloyds monthly saver as you'd still likely be better off staying put at 5.25% but for the BOS monthly saver it just about tips the balance in favour of renewing for the better rate in my case.

They could have 6 payments,£2.4k in it: 16 October 1st of N D J F M

I'm not denying that you can have 6 payments in by now (I am living proof of that) but that's still not the same as having the account open for 6 months.

If it was someone could have opened the account on 28th Feb made a deposit there and then and then funded it again on 1st of March. They would have made 2 payments into the account as of 1st March but they wouldn't have had the account for 2 months would they?

Most people won't remember the date they opened their account, so are using the balance as a guide. The number of months is just being used as a proxy for the balance in the preceding discussion anyway.

I'd guess most of us here are "rate chasers", so will have probably maxed out our monthly contributions to Regular Savers.

Perhaps I'm in the minority then, as I use them a little differently. I spread out my applications over the calendar year such that I am never more than a couple of months from having one mature. This way I can keep a float of cash saved continuously across these accounts. A consequence is that when a new one comes up, I often need to wait a while before slotting it in, always of course prioritising the best of those I don't already hold.

But do you max them out once opened?

If by 'max them out', you mean make the full monthly contribution at the earliest opportunity, then yes. Wasn't clear if you meant something else, e.g. opened soon after launch, so balance is the maximum theoretically possible for anyone at that time.

35har1old

MisterMotivated said:

35har1old said:

Band7 said:

soulsaver said:

Bridlington1 said:

I'm not trying to be pedantic here but how can anyone have had the 5.25% Club Lloyds monthly saver for 6 months? They launched those rates around mid October so the most anyone could have had them for is around 4 1/2 months.

It doesn't make much difference in the case of the Club Lloyds monthly saver as you'd still likely be better off staying put at 5.25% but for the BOS monthly saver it just about tips the balance in favour of renewing for the better rate in my case.

They could have 6 payments,£2.4k in it: 16 October 1st of N D J F M

Yes exactly, as of March 1, I have £2,400 in my Club Lloyds account. 

How are losing anything when you are getting paid the interest now and you would have the same problem finding a home for £4800 in 6 months time

Because you can't just renew the account and keep the balance you previously had; instead you have to spend the next 6 months with the average RS balance approaching £1,200 rather than £2,400 (half final balances used for simplicity).

Conversely to your question, how would I be better off starting again at the higher rate today?

As you can't renew and carry balance over at maturity either. You are going to start over from scratch again with a larger sum to find a home for. Doing it early you have already found a home for roughly16.5% compared to 8.5%  in the future on £400mth 

masonic

35har1old said:

MisterMotivated said:

35har1old said:

Band7 said:

soulsaver said:

Bridlington1 said:

I'm not trying to be pedantic here but how can anyone have had the 5.25% Club Lloyds monthly saver for 6 months? They launched those rates around mid October so the most anyone could have had them for is around 4 1/2 months.

It doesn't make much difference in the case of the Club Lloyds monthly saver as you'd still likely be better off staying put at 5.25% but for the BOS monthly saver it just about tips the balance in favour of renewing for the better rate in my case.

They could have 6 payments,£2.4k in it: 16 October 1st of N D J F M

Yes exactly, as of March 1, I have £2,400 in my Club Lloyds account. 

How are losing anything when you are getting paid the interest now and you would have the same problem finding a home for £4800 in 6 months time

Because you can't just renew the account and keep the balance you previously had; instead you have to spend the next 6 months with the average RS balance approaching £1,200 rather than £2,400 (half final balances used for simplicity).

Conversely to your question, how would I be better off starting again at the higher rate today?

As you can't renew and carry balance over at maturity either. You are going to start over from scratch again with a larger sum to find a home for. Doing it early you have already found a home for roughly16.5% compared to 8.5%  in the future on £400mth 

You've completely lost me. It's true that the account matures after 12 months and you have no choice over that. However, that isn't an argument for restarting any time the rate increases regardless of how much you have in the account at that time. You get the most value from RS accounts in the later months when your balance is higher.

There is an opportunity cost to restarting for anyone with a balance higher than £400, because some money will have to earn a lower rate of interest until it can be re-deposited into the new RS. Whether that initial hit can be recouped depends on a few factors, most importantly the balance in the account at the time. There has been plenty discussed on the calculations and determining the likely break-even point. It still involves taking a risk as nobody knows what will happen to the rate on this account in the future.

35har1old

masonic said:

35har1old said:

MisterMotivated said:

35har1old said:

Band7 said:

soulsaver said:

Bridlington1 said:

I'm not trying to be pedantic here but how can anyone have had the 5.25% Club Lloyds monthly saver for 6 months? They launched those rates around mid October so the most anyone could have had them for is around 4 1/2 months.

It doesn't make much difference in the case of the Club Lloyds monthly saver as you'd still likely be better off staying put at 5.25% but for the BOS monthly saver it just about tips the balance in favour of renewing for the better rate in my case.

They could have 6 payments,£2.4k in it: 16 October 1st of N D J F M

Yes exactly, as of March 1, I have £2,400 in my Club Lloyds account. 

How are losing anything when you are getting paid the interest now and you would have the same problem finding a home for £4800 in 6 months time

Because you can't just renew the account and keep the balance you previously had; instead you have to spend the next 6 months with the average RS balance approaching £1,200 rather than £2,400 (half final balances used for simplicity).

Conversely to your question, how would I be better off starting again at the higher rate today?

As you can't renew and carry balance over at maturity either. You are going to start over from scratch again with a larger sum to find a home for. Doing it early you have already found a home for roughly16.5% compared to 8.5%  in the future on £400mth 

You've completely lost me. It's true that the account matures after 12 months and you have no choice over that. However, that isn't an argument for restarting any time the rate increases regardless of how much you have in the account at that time. You get the most value from RS accounts in the later months when your balance is higher.

There is an opportunity cost to restarting for anyone with a balance higher than £400, because some money will have to earn a lower rate of interest until it can be re-deposited into the new RS. Whether that initial hit can be recouped depends on a few factors, most importantly the balance in the account at the time. There has been plenty discussed on the calculations and determining the likely break-even point. It still involves taking a risk as nobody knows what will happen to the rate on this account in the future.

You are wrong to say that you get the most value from them in the later months as the money that you contribute in the later months has less time to earn interest.
And the example you set out above would be reinvested in 2 months or less  not the six (5) as you are able to contribute £400 a month and if you wished to reduce it to £200 thereafter you entitled to do that,

MisterMotivated

The first month's balance (assuming 12 deposits equally spaced) will earn about the same interest over a year as the final month's balance will in a single month.  Around 73% of the total interest after a year will have been earned in the second half of the year.

masonic

35har1old said:

masonic said:

35har1old said:

MisterMotivated said:

35har1old said:

Band7 said:

soulsaver said:

Bridlington1 said:

I'm not trying to be pedantic here but how can anyone have had the 5.25% Club Lloyds monthly saver for 6 months? They launched those rates around mid October so the most anyone could have had them for is around 4 1/2 months.

It doesn't make much difference in the case of the Club Lloyds monthly saver as you'd still likely be better off staying put at 5.25% but for the BOS monthly saver it just about tips the balance in favour of renewing for the better rate in my case.

They could have 6 payments,£2.4k in it: 16 October 1st of N D J F M

Yes exactly, as of March 1, I have £2,400 in my Club Lloyds account. 

How are losing anything when you are getting paid the interest now and you would have the same problem finding a home for £4800 in 6 months time

Because you can't just renew the account and keep the balance you previously had; instead you have to spend the next 6 months with the average RS balance approaching £1,200 rather than £2,400 (half final balances used for simplicity).

Conversely to your question, how would I be better off starting again at the higher rate today?

As you can't renew and carry balance over at maturity either. You are going to start over from scratch again with a larger sum to find a home for. Doing it early you have already found a home for roughly16.5% compared to 8.5%  in the future on £400mth 

You've completely lost me. It's true that the account matures after 12 months and you have no choice over that. However, that isn't an argument for restarting any time the rate increases regardless of how much you have in the account at that time. You get the most value from RS accounts in the later months when your balance is higher.

There is an opportunity cost to restarting for anyone with a balance higher than £400, because some money will have to earn a lower rate of interest until it can be re-deposited into the new RS. Whether that initial hit can be recouped depends on a few factors, most importantly the balance in the account at the time. There has been plenty discussed on the calculations and determining the likely break-even point. It still involves taking a risk as nobody knows what will happen to the rate on this account in the future.

You are wrong to say that you get the most value from them in the later months as the money that you contribute in the later months has less time to earn interest.

I'm not wrong to say that, you might just value different things than me. I value getting the highest return on my savings as a whole. You seem to favour getting the best rate on a small amount of money.

You earn a higher interest rate on more of your money in the later months because you can have a higher balance in the account. The maximum length of time you can run the account is 12 months. If you reset it within a shorter timeframe, such as after 11 months, 10 months, 9 months etc, then you will make less from your savings than someone who maxes it out and lets it run for the full 12 months. As an extreme example, if you just put £400 in there and kept another £4,400 in an easy access savings account, the result would hardly be any different than keeping £4,800 in easy access savings and not bothering with the RS at all. Same if you carried out this 'renew' procedure monthly - BUT, if you only have £400 in savings, it would always make sense to reset upon a rate rise.

35har1old said:

And the example you set out above would be reinvested in 2 months or less  not the six (5) as you are able to contribute £400 a month and if you wished to reduce it to £200 thereafter you entitled to do that,

The example I gave above was someone who had "a balance higher than £400". For the avoidance of doubt, that is a balance between £400.01 and £5,200. The higher the balance, the higher the opportunity cost. You are right that someone with £400.01 or even £800 faces very little opportunity cost, but you are incorrect that any balance above £400 can be replaced in 2 months or less.

Bridlington1

35har1old said:

masonic said:

35har1old said:

MisterMotivated said:

35har1old said:

Band7 said:

soulsaver said:

Bridlington1 said:

I'm not trying to be pedantic here but how can anyone have had the 5.25% Club Lloyds monthly saver for 6 months? They launched those rates around mid October so the most anyone could have had them for is around 4 1/2 months.

It doesn't make much difference in the case of the Club Lloyds monthly saver as you'd still likely be better off staying put at 5.25% but for the BOS monthly saver it just about tips the balance in favour of renewing for the better rate in my case.

They could have 6 payments,£2.4k in it: 16 October 1st of N D J F M

Yes exactly, as of March 1, I have £2,400 in my Club Lloyds account. 

How are losing anything when you are getting paid the interest now and you would have the same problem finding a home for £4800 in 6 months time

Because you can't just renew the account and keep the balance you previously had; instead you have to spend the next 6 months with the average RS balance approaching £1,200 rather than £2,400 (half final balances used for simplicity).

Conversely to your question, how would I be better off starting again at the higher rate today?

As you can't renew and carry balance over at maturity either. You are going to start over from scratch again with a larger sum to find a home for. Doing it early you have already found a home for roughly16.5% compared to 8.5%  in the future on £400mth 

You've completely lost me. It's true that the account matures after 12 months and you have no choice over that. However, that isn't an argument for restarting any time the rate increases regardless of how much you have in the account at that time. You get the most value from RS accounts in the later months when your balance is higher.

There is an opportunity cost to restarting for anyone with a balance higher than £400, because some money will have to earn a lower rate of interest until it can be re-deposited into the new RS. Whether that initial hit can be recouped depends on a few factors, most importantly the balance in the account at the time. There has been plenty discussed on the calculations and determining the likely break-even point. It still involves taking a risk as nobody knows what will happen to the rate on this account in the future.

You are wrong to say that you get the most value from them in the later months as the money that you contribute in the later months has less time to earn interest.
And the example you set out above would be reinvested in 2 months or less  not the six (5) as you are able to contribute £400 a month and if you wished to reduce it to £200 thereafter you entitled to do that,

But in the later months you have a larger balance earning the higher interest rate. 

Let's assume you have had a Club Lloyds monthly saver which had been opened and funded on 1st of a month and we were on the final day of the 5th month now. If we take the example of the Club Lloyds monthly saver at 5.25% and the decision to stick or switch and see what happens over the next 6 months: 
As you can see sticking with the old rate will earn you £17.67 more over the next 6 months than switching to the new rate. What's more even if the new Club Lloyds monthly saver rose to 9.25% you'd still end up with 34p less interest according to these calculations if you switched.

So @masonic is perfectly correct that regular savers are of more value in their later months.