Closing Regular Saver - First Direct and others

Tom_Hendo

Hi All

I am looking at an option to generate interest into this years tax band rather than next years.

This means for 3 of my regular saver accounts this means closing them early or 'renewing' them. I would however like to re-open them in early April (7th+) to generate interest payable into the 2 years time tax bracket. 

For Lloyds / Halifax I understand you can renew the accounts in online banking, and re-open within the 12 month window. 

Does anyone know whether the same or similar is available via First Direct? Or anyone had experiencing closing and then opening an account again?

jaypers

First Direct will only pay you a tiny amount of interest if you close early and not the 7%. 

ForumUser7

N.B if you close first direct, HSBC, Monmouthshire Bs and possibly some others, there is a massive interest penalty. First Direct drops to their easy access rate, and this is backdated too to the account opening. Have a look on their websites - it may not be a good decision.

refluxer

How long have these accounts been running ? Even for accounts where there isn't a penalty for early closure, due to the nature of how Regular Savers work, the amount of interest you're likely to get back from closing one early (eg. after a few months) is likely to be very small and not worth worrying about from a tax point of view, so make sure you do your sums carefully first. 

Tom_Hendo

jaypers said:

First Direct will only pay you a tiny amount of interest if you close early and not the 7%. 

Well that solves that quandary! Thanks both

Tom_Hendo

refluxer said:

How long have these accounts been running ? Even for accounts where there isn't a penalty for early closure, due to the nature of how Regular Savers work, the amount of interest you're likely to get back from closing one early (eg. after a few months) is likely to be very small and not worth worrying about from a tax point of view, so make sure you do your sums carefully first. 

Thanks for this, it is something I had to wrap my head around last year. And seen someone's recent calculations based on where you put the 'excess' from the 1 month in the new rate account and where it could or would even out. 

I've just been fortunate enough to have a change in circumstance and will now tickle the higher tax bracket for next year assuming nothing changes, so its changed my initial planned 1000 personal allowance plan down to 500 meaning getting into this tax year will outweigh the higher rate next year after tax will be taken from it. First Direct at 7% is actually the only one that beats my Flexible ISA post tax still, was just trying to maximise this years allowance.

YorkshireBoy

Tom_Hendo said:

...was just trying to maximise this years allowance.

Maybe address it via next years allowance instead? Adding to a pension could allow you to retain your £1K savings interest.

Emmia

The HSBC regular saver closes automatically at the end of the term, and the money gets moved to a normal instant access saver - you can only open another one after this is completed.

Cisco001

Tom_Hendo said:

Hi All

I am looking at an option to generate interest into this years tax band rather than next years.

This means for 3 of my regular saver accounts this means closing them early or 'renewing' them. I would however like to re-open them in early April (7th+) to generate interest payable into the 2 years time tax bracket. 

For Lloyds / Halifax I understand you can renew the accounts in online banking, and re-open within the 12 month window. 

Does anyone know whether the same or similar is available via First Direct? Or anyone had experiencing closing and then opening an account again?

Club lloyds monthly saver.
Do you know after you 'renew' , would you able to re-open another club lloyds monthly saver?

I currently have club lloyds monthly saver for 5%, their current rate is 6.25%

However, I notice one of the requirement for opening club lloyds monthly saver is -

• have not opened one of these accounts in the last 12 months.

I am not sure if I should 'renew' my account...

Tom_Hendo

Cisco001 said:

Tom_Hendo said:

Hi All

I am looking at an option to generate interest into this years tax band rather than next years.

This means for 3 of my regular saver accounts this means closing them early or 'renewing' them. I would however like to re-open them in early April (7th+) to generate interest payable into the 2 years time tax bracket. 

For Lloyds / Halifax I understand you can renew the accounts in online banking, and re-open within the 12 month window. 

Does anyone know whether the same or similar is available via First Direct? Or anyone had experiencing closing and then opening an account again?

Club lloyds monthly saver.
Do you know after you 'renew' , would you able to re-open another club lloyds monthly saver?

I currently have club lloyds monthly saver for 5%, their current rate is 6.25%

However, I notice one of the requirement for opening club lloyds monthly saver is -

• have not opened one of these accounts in the last 12 months.

I am not sure if I should 'renew' my account...

Their T&C say no as you have listed, however multiple users of the forum have highlighted that if you RENEW (rather than close) the account, it lets you open another one the next day with the new rate.

Someone added this above, but you need to do the Maths on whether it is actually beneficial to do so. If you only have 1 months amount in the account, it is likely beneficial. If you have put multiple months into the accoutn already its probably worth leaving as is. Without going into the full detail, the basis if you have £2K in there now earning 5.25%, it will take a long time or not at all to take £400 into 6.25% while the other £1600 rests in an easy access at what, 3%? to catch up.