8% Nationwide Regular Saver - 13 payments?

spider42

But the "13th payment" question also acts as a shorthand for accounts (like this one) where it is possible to make 13 deposits because the duration the account is open spans 13 calendar months and there are no explicit T&Cs either probiting more than 12 deposits, or exceeding a balance of £x.

As has been patiently explained, the value from these "13th payment" accounts is in the ability to make two early maximum deposits within days of each other, leading to nearly a year's worth of interest on a double deposit.

What Rollinghome is trying to articulate, quite correctly, is that the ability to make 13 payments has absolutely nothing to do with the ability to make two early maximum deposits. They are completely unrelated concepts.

Making two early maximum deposits relies on the account using calendar months rather than months based on account opening date. Almost all regular savers operate on calendar months (the main exception being Coventry), there is nothing unusual about the Nationwide account in this respect.

If you deposit £200 into Nationwide on 30/9/23, and then £200 on 1/10/23 and monthly thereafter up to and including 1/9/24, making 13 payments in total, the total interest would be £119.76.

If Nationwide had set instead a balance limit of £2,400 (preventing you from making a 13th deposit on 1/9/24 if you've maxed out all the others), and paid in £200 on 30/9/23 followed by £200 on 1/10/23 and monthly thereafter up to and including 1/8/24, making 12 payments in total, the total interest would be £118.49. The balance limit (aka 13th payment) only makes a tiny difference.

molerat

spider42 said:

Making two early maximum deposits relies on the account using calendar months rather than months based on account opening date. Almost all regular savers operate on calendar months (the main exception being Coventry), there is nothing unusual about the Nationwide account in this respect.

And Santander who run just about all their accounts on opening date months.

Wheres_My_Cashback

spider42 said:

But the "13th payment" question also acts as a shorthand for accounts (like this one) where it is possible to make 13 deposits because the duration the account is open spans 13 calendar months and there are no explicit T&Cs either probiting more than 12 deposits, or exceeding a balance of £x.

As has been patiently explained, the value from these "13th payment" accounts is in the ability to make two early maximum deposits within days of each other, leading to nearly a year's worth of interest on a double deposit.

What Rollinghome is trying to articulate, quite correctly, is that the ability to make 13 payments has absolutely nothing to do with the ability to make two early maximum deposits. They are completely unrelated concepts.

Making two early maximum deposits relies on the account using calendar months rather than months based on account opening date. Almost all regular savers operate on calendar months (the main exception being Coventry), there is nothing unusual about the Nationwide account in this respect.

If you deposit £200 into Nationwide on 30/9/23, and then £200 on 1/10/23 and monthly thereafter up to and including 1/9/24, making 13 payments in total, the total interest would be £119.76.

If Nationwide had set instead a balance limit of £2,400 (preventing you from making a 13th deposit on 1/9/24 if you've maxed out all the others), and paid in £200 on 30/9/23 followed by £200 on 1/10/23 and monthly thereafter up to and including 1/8/24, making 12 payments in total, the total interest would be £118.49. The balance limit (aka 13th payment) only makes a tiny difference.

And FD and HSBC and Santander and some Coventry RS.

Section62

spider42 said:

But the "13th payment" question also acts as a shorthand for accounts (like this one) where it is possible to make 13 deposits because the duration the account is open spans 13 calendar months and there are no explicit T&Cs either probiting more than 12 deposits, or exceeding a balance of £x.

As has been patiently explained, the value from these "13th payment" accounts is in the ability to make two early maximum deposits within days of each other, leading to nearly a year's worth of interest on a double deposit.

What Rollinghome is trying to articulate, quite correctly, is that the ability to make 13 payments has absolutely nothing to do with the ability to make two early maximum deposits. They are completely unrelated concepts.

Not "completely unrelated"

They stem from the same thing - the basis of the account being calendar monthly deposits with the date of the deposit being variable by the account holder.  These characteristics that permit two early maximum deposits are the same as those that allow (subject to any further restriction) the ability to make 13 maximum deposits. It is in the account's DNA.

Monthiversary accounts, or those where the deposit date (e.g. by SO) is fixed, preclude both the potential for two early maximum deposits and the ability to make 13 maximum deposits.

Rollinghome's point is in fact that the last deposit (be it the 13th or the 12th) doesn't earn much interest.  We all know that, nobody is disputing that point. 

But it is a different point to whether advantage can be gained by making two early maximum deposits.

The same argument about the value of the 13th (final) deposit applies also to the 12th for those accounts where only 12 maximum deposits are permitted.

It's a difficult concept for some people to grasp, but it is really the initial deposit that should be thought of as the "13th deposit", not the last one.  Effectively the initial deposit is the one we can get in just before the 'proper' 12 calendar months start, giving us a head start on the balance.

Rollinghome

ColdIron said:

EthicsGradient said:

Rollinghome said:

EthicsGradient said:

Rollinghome said:

EthicsGradient said:

Rollinghome said:

WillPS said:

Rollinghome said:

ColdIron said:

No, you can get an extra £16. Discussed at length in this thread

How so?  I pay in £200 on the first day of the last month.  I get paid 8.00% on that until just less than a month until the account is closed.  8.00% is 2.80% more than 5.2% I get from the EA account.  2.80% on £200 for a year is £5.60 for a full year.  For the just one month (it would have to be less) before the account matures, is £5.60/12 = 0.47p.

Because, timed correctly, you can make 2 x £200 payments at the beginning of the term. The additional £200 payment is worth (up to) £16 in interest upon maturity. The difference with the Santander Easy Access is £5.60.

And that's nothing to do with what I said. The final £200 can only earn interest for less than 1 month. 

So for £200 at 8.00% interest for a full year would be £16.00.  For just one month, the interest on that £200 would be £16.00/12 = £1.33. Not £16.00.

But then that doesn't take into account the interest that would be lost by the account the payment was made from. If from an account already paying 5.2% then the gain would be just £0.47p.  

If you are trying to work out how much extra you get over an ordinary EA account you need to take into account the interest the EA account pays. (You may also lose extra days if the money is sitting in a current account waiting for a SO to pay.)

To put it another way, if you left that final £200 in your 5.2% EA account instead of transferring it to your 8.00% RS account, you'd only get 47p less.

As with the misunderstanding around RSs only paying half the stated rate, you only get interest for the time your money is in the account. You don't get 12 months interest for money that's only in the account for one month.

But you're not taking into account the extra interest other payments are getting from being paid on the first of each month. Open one today; 1st payment will be in for 366 days. You can then make your second payment on 1st October (tomorrow) so that's in for 365 days. 3rd is in for 334 days, and so on. Effectively, you've made 2 payments that get about a year, 1 for 11 months, and so on, up to the 13th payment in for a month (there's 1 day less on each of those (eg 1st Oct 2023 to 30th Sept 2024), but that is more than made up for by the the extra payment in for a full year).

So that'd be about £15 above a no-interest account, taking off a little for the day difference; about £5.50 above the best easy access account.

You've missed the point.  You can still pay in on the first day of the month if you want to.  Whatever you do, you'll still only get a maximum of 1 month's interest on money that's only there for the last month before the account matures. There's no magic.

As for the old and much repeated "wait till the last day of the month before opening" wheeze, remember to take into account the interest lost by keeping money in a lower paying account while waiting for the end of the month. The timing is also a bit more complicated than you suggest, e.g. if the rate is competitive on 2 Oct but less competitive in 12 months time. Delaying then gives you less time when the rate is competitive.

No, sorry, everyone else understands it, and you don't. We've all tried explaining it to you, but you're clearly not going to get it, however it's put. That's OK - it's not as if it's you contemplating whether to use it, so it doesn't matter.

"remember to take into account the interest lost by keeping money in a lower paying account while waiting for the end of the month" - well, that's a different scenario. Everyone has been talking about starting the account in the past few days or today (if it can still be opened on a Saturday - anyone had luck?), ie at the end of a month, without waiting.

Well, Coldiron gets the point being made now, see his post on the previous page, so I'm not sure why you still don't. I suggest you read through the relevant posts again.  

To repeat, it's about the value of making a 13th payment as referred to in the thread title.  Not about the value of doubling up the initial payment as soon as possible. (Though that too, is more complicated by other factors than you seem to realise.)   Nor do you need to do the sums for anyone, it's a "wheeze" that's been espoused ever since RS accounts have been around.

In answer to your question, any account with Nationwide can be opened on any day of the week.

I know you're not interested, but by now, the important thing is that no one else should be put off opening an account and funding it today, and then funding it on the 1st of each subsequent month, just because you can't understand.

This is an important point

I'm not fussed about being misquoted and all the rest of it, but within only 7 minutes of rollinghome making their initial post another poster asked this:

With this account would it be worth doing what I intend doing with my Skipton 7.5% monthly saver only funding it in the earlier months. For example with the Skipton 1st payment attracts 7.5% over a year.  Next payment attracts 11/12ths of 7.5% and so on until it's not worth putting any more in once you get to the sixth month

Now I'm not suggesting that one is a consequence of the other in this case but it's easy to see how talk of not funding the last, or last few, months can perpetuate this common mistake

For enquiring minds, I am beginning to reassess the value of that final Hot Wing

Well, I'm sorry if you think I misquoted you.  Would you like to say in what way?

So there is no misunderstanding, the complete first post I made to this thread on p5 was:

So we're all gonna be rich! The 8% NW RS pays another 2.8% over what I'd get in a 5.2% EA account. So if I pay in that extra £200 for the last month, I'll get a whopping extra £5.60/12 = 0.47p (ignoring the few missing days etc.) before the account matures. 

I haven't decided what to spend it on yet.

Your complete post immediately below 5 minutes later said:

No, you can get an extra £16. Discussed at length in this thread

 Now, it's possible you were replying to another post or misread what I said, but if so, you didn't say so when I replied to you.

Seems clear enough what the "extra £200 for the last month" means, doesn't it?  It does not mean any payments made in the first two months.

It's a bit rich to blame me for someone's misunderstanding.  At the same time, he/she should be congratulated for actually thinking about it. 

The best way to have people understand savings accounts is to give them factual information and not to over-complicate.  For example, by suggesting that if they overly worry about the timing and then suggesting they will substantially gain by getting in a £200 13th payment for a few weeks before maturity. 

We shouldn't make it more difficult than it is: just get your saving into the highest, safe rate as soon as possible while considering alternatives such as investments.

As you yourself have now admitted, that 13th payment will have very little net benefit.  "About the cost of a ketchup sachet at your local chippy" as you later put it, so less than the price of a stamp. I don't know the state of your finances, but a one-off few pennies won't seem a lot to most people in the real world.

You later said:

Certainly the difference on that 13th £200 is only £0.47. If you didn't make the final payment and kept it in a 5.20% account you would only be poorer by about the cost of a ketchup sachet at your local chippy

But it would be unsound to consider it in isolation

The major benefit of these 'calendar month' accounts is not the final, or 13th, payment but the first

Which was helpful to anyone who thought otherwise. If we can agree that the net gain of a 13th payment is likely to be very small by any standard, then that's fine. So long as you are clear on that.  That applies regardless of whether the account is opened at the end of the month or earlier (when the gain would be even smaller). 

I'd be happy to discuss another time those occasions when starting a RS account at the end of the month (which I tend to do if I use a good RS account, and it makes sense), might not be such a "major benefit".

JGB1955

Having watched this thread unfold I will now admit that I am now fully informed and realise that my assumption that payment #13 would work out at something like 47p is FAR outweighed by payments #1 and #2 (one day apart) earning an extra £16-ish.  Every day is a learning day!

zagfles

friolento said:

zagfles said:

It might help if NW didn't call the account a regular saver. It isn't a regular saver. It's a high interest account with deposit limits. You can use it like a regular saver, but you could use it in other ways too. 

high interest account with deposit limits is what I know as regular saver

Oh, OK, so if you just put £100 in the first month, then withdraw £50 the next, do nothing for the next 4 months, then withdraw another £30, then add £100 6 months later, then next month withdraw the whole lot and buy a KFC bucket and some ketchup sachets with the rest. Is that a "regular saver" still? You can use the NW account in that way if you want. Almost like an easy access account.

OTOH "real" regular savers like the FD one, you must make a payment every month, at the same time of the month, for 12 months, and you can't make withdrawals. That's a "regular saver". You have to save regularly.

zagfles

molerat said:

spider42 said:

Making two early maximum deposits relies on the account using calendar months rather than months based on account opening date. Almost all regular savers operate on calendar months (the main exception being Coventry), there is nothing unusual about the Nationwide account in this respect.

And Santander who run just about all their accounts on opening date months.

And First Direct who set up a SO for payments on the same date of the month as you opened it

zagfles

JGB1955 said:

Having watched this thread unfold I will now admit that I am now fully informed and realise that my assumption that payment #13 would work out at something like 47p is FAR outweighed by payments #1 and #2 (one day apart) earning an extra £16-ish.  Every day is a learning day!

No, no, no tut tut.

If the NW RS is used optimally:

Payment #1 earns exactly what the first payment to any RS account at the same rate would earn.

Payments #2-12 earn almost a month's extra interest

Payment #13 earns almost a month's interest.

In total approx a year's extra interest on the monthly payment.

I hope you've been educated on this issue that some people find incredibly trivial but seem to want to write about endlessly. 

I wouldn't want to try the split the KFC bill with them. Imagine the arguments over who used the ketchup sachets

friolento

zagfles said:

friolento said:

zagfles said:

It might help if NW didn't call the account a regular saver. It isn't a regular saver. It's a high interest account with deposit limits. You can use it like a regular saver, but you could use it in other ways too. 

high interest account with deposit limits is what I know as regular saver

Oh, OK, so if you just put £100 in the first month, then withdraw £50 the next, do nothing for the next 4 months, then withdraw another £30, then add £100 6 months later, then next month withdraw the whole lot and buy a KFC bucket and some ketchup sachets with the rest. Is that a "regular saver" still? You can use the NW account in that way if you want. Almost like an easy access account.

OTOH "real" regular savers like the FD one, you must make a payment every month, at the same time of the month, for 12 months, and you can't make withdrawals. That's a "regular saver". You have to save regularly.

At least half of all regular savers that I have seen do not have a minimum monthly deposit requirement of > £0. Many of them also let you withdraw, or even close, before maturity, some with and others without penalty. Even the "real" FD one can be closed before maturity.

As a longstanding member of the MSE Forum, I suspect you know of the Regular Saver thread but I mention it in case you don't