Regular Savers - are they worth it?

SJRoberts1234

Hello,

I’m sorry if this is a silly question or if it’s been asked before, but I’m wondering if regular savers are actually worth it when easy access savers are offering high rates.

I have an easy access saver that will offer 4.02% gross interest from the 14th August, while I also save into a 7% regular saver and a 5.5% regular saver. As the actual interest for regular savers tends to work out to approximately half the headline rate, it makes me wonder whether it’s just worth saving my money directly into my 4.02% easy access saver? Any advice would be welcome.

Thank you,
Simon.

jimjames

7% is more than 4% so why wouldn't it be worth it? You can keep the money in the 4% account until it is moved over, you seem to be assuming that the money earns nothing if it's outside the regular saver which hopefully wouldn't be the case. And for info the rate for regular savers is exactly what it says on the tin so 7%, no more, no less. You just don't earn interest on money that's not in the account which is quite understandable really.

jaypers

Been discussed to death on here but combination of easy access and regular saver, filtering one from the other, is the best strategy if you don’t want to go for a fixed account. 

friolento

You can use the MSE regular saver calculator to work out the effects of drip feeding from your lower rate account into the higher rate ones.

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

eskbanker

SJRoberts1234 said:

As the actual interest for regular savers tends to work out to approximately half the headline rate...

That's a common misconception, that ignores the fact that the balance is built up gradually over the term, so it's generally more helpful (and accurate) to think of it as full interest rate * half the closing balance [the approximate average over the term] than half interest rate * full closing balance....

Exodi

SJRoberts1234 said:

Hello,

I’m sorry if this is a silly question or if it’s been asked before, but I’m wondering if regular savers are actually worth it when easy access savers are offering high rates.

I have an easy access saver that will offer 4.02% gross interest from the 14th August, while I also save into a 7% regular saver and a 5.5% regular saver. As the actual interest for regular savers tends to work out to approximately half the headline rate, it makes me wonder whether it’s just worth saving my money directly into my 4.02% easy access saver? Any advice would be welcome.

Thank you,
Simon.

You've misunderstood.

£300 paid at the start of the month, every month for a year, into the First Direct 7% Regular Saver will return £139.46 (using FV on Excel to keep it consistent, FD cites £136.50 of interest).

£300 paid at the start of the month, every month for a year, into an account paying 5.5% will return £109.07 (using FV on Excel).

The common issue is that people calculate interest as if they had the full amount deposited for the entire year, or unfairly compare depositing £300 a month into the first direct account VS immediately depositing £3600 into an easy access account at the start of the year (which would return £198.00). The misunderstanding being that if you had £3600 immediately available, there's no reason you couldn't put the £300 a month into the First Direct Regular Saver and keep the rest in an Easy Access account.

People over-complicate this stuff, there is no hidden tricks, it really is as simple as 7% > 5.5%.

The only reason you might consider not doing it, is if you need the money in 12 months (as First Direct penalises the interest for early withdrawal).

EDIT: should have read the other comments first.

jaypers said:

Been discussed to death on here but combination of easy access and regular saver, filtering one from the other, is the best strategy if you don’t want to go for a fixed account. 

^ this.

SJRoberts1234

Thank you all for your help!

Stargunner

You can earn a lot more than 4.02% gross interest by putting your money in higher interest paying easy access accounts, which are all discussed on these forums.

Exodi

Stargunner said:

You can earn a lot more than 4.02% gross interest by putting your money in higher interest paying easy access accounts, which are all discussed on these forums.

Tandem leading the pack with 5% on their easy access account which was announced today!

lohr500

Probably explains why the Tandem App won't let me log in !!!!!!

Zaul22

As of today, no. Not the fixed ones anyway. Natwest/RBS is still good as it's monthly interest and variable rate. (If you are one of the lucky few that don't get your account closed for no reason).