LLoyds ups rate to 6.25% on Club LLoyds

dealyboy

Bridlington1 said:

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. 

... and now can you work out the odds of sticking at 17 ?

... oops, sorry wrong game 

AndrewSteele888

A question if your not paying tax on saving this year but will next year I guess that would tip the scales in favour of closing and renewing or at least by the end of the month.

MisterMotivated

It's definitely something to take into consideration, though I suppose it would depend how far over the taxable threshold you are expecting to be

Band7

MisterMotivated said:

It's definitely something to take into consideration, though I suppose it would depend how far over the taxable threshold you are expecting to be

also what your tax rate is

35har1old

dealyboy said:

Bridlington1 said:

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. 

... and now can you work out the odds of sticking at 17 ?

... oops, sorry wrong game 

What monthly contributions is your chart based on ?

phillw

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.

You are both confusing two different things. Leaving the money in for a long time gives the best return.

So the best strategy would be to reduce the payment to the minimum after the sixth payment, let it run to term and open another regular saver

The issue here is if you already have all the regular savers, then you have nowhere else to go.

masonic

phillw said:

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.

You are both confusing two different things. Leaving the money in for a long time gives the best return.

So the best strategy would be to reduce the payment to the minimum after the sixth payment, let it run to term and open another regular saver

The issue here is if you already have all the regular savers, then you have nowhere else to go.

Even the old rate of 5.25% beats most other RS, and I'd imagine most prioritise the highest paying ones first. That, combined with the high contribution limit, makes it worth continuing even at the 5.25% rate for most people who are too many months in to consider resetting. If there were a better paying option not already in use, then that probably should be taken up when it first becomes available, rather than when Lloyds decides to change the rate for new customers.

Stevo_safc

A bit off topic but if my partner wants to join club Lloyds but doesn't have £2000 going into her account each month can I just transfer it to her and then she sends it straight back?

masonic

Stevo_safc said:

A bit off topic but if my partner wants to join club Lloyds but doesn't have £2000 going into her account each month can I just transfer it to her and then she sends it straight back?

Yes, or she could bounce money between her own accounts to satisfy this criterion.

flaneurs_lobster

Stevo_safc said:

A bit off topic but if my partner wants to join club Lloyds but doesn't have £2000 going into her account each month can I just transfer it to her and then she sends it straight back?

      Yep