8% Nationwide Regular Saver - 13 payments?

Rollinghome

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.

refluxer

MACKEM99 said:

Yes I meant 13.  But main point was to the person who said there is no max ..there is.

It's common for Regular Saver account T&Cs to state a maximum balance which can then limit the account to 12 payments. When I said 'there is no maximum balance for this account and you're not restricted to 12 payments', I meant there was no maximum balance stated on the T&Cs and this, alongside the 'calendar month' definition, allows for 13 payments.

ColdIron

MACKEM99 said:

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 as you can get a better rate from another account.  Is my logic correct?

No

Next payment attracts 11/12ths of 7.5%

It still attracts 7.50% but on 11/12ths of the term

Sounds the same but it isn't. If you work it out that way you will probably conclude that you only get 3.75% (and deceasing) from month 6

until it's not worth putting any more in once you get to the sixth month as you can get a better rate from another account

Yup

You are still getting 7.50% but for a shorter term

The question you should ask yourself is where else would you put the money? If you put it in a 4.00% account for the same term you will earn less interest

7.50% is better than 4.00% (or whatever)

This is probably the most misunderstood aspect of regular savers. You're not the first, and certainly won't be the last, to make the mistake of assuming the interest rate is less than what it is

refluxer

howryoo said:

Whilst logged in to apply, has everyone else been asked about employment / income details etc?  It's a savings account.  I appreciate they need to ask how the account will be funded.

Yes, everyone would have been asked the same questions. It's presumably anti-money laundering requirements just getting stricter and stricter.

friolento

MACKEM99 said:

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 as you can get a better rate from another account.  Is my logic correct?

You are always getting the advertised rate (which may or may not change during the year, but it won't change retrospectively). But obviously you will not get a year's worth of interest for money that isn't deposited for a year.

Interest in all interest-bearing accounts is calculated daily. The daily rate is established by dividing the AER by 365. Except perhaps when comparing ISAs and non-ISAs for your tax rate, a higher AER always gives you a better return.

EXAMPLE:

In a 5.2% account, the daily rate is 0.0142%
In a 7.5% account, the daily rate is 0.0205%

You gain nothing from stopping your deposits into the 7.5% account and instead leaving it in the 5.2%.

EthicsGradient

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.

zagfles

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.

We've had this discussion in another thread.

If you compare

a) opening the account today (ie last day of month) paying in £200, then paying £200 tomorrow and the first of every month until 1st Sept 2024

with

b) paying in £200 12 times on the same date every month

You have an extra £200 in the account for almost the entire year in a) compared to b), not just one month.

That is the way you squeeze a bit more interest from this account compared to other RS accounts. It's not just the 13th payment, it's the timing of opening the account and subsequent monthly payments

ColdIron

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. 
[SNIP]

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.

You are focussing on the final payment in isolation

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

Timed well they allow you to increase the monthly balance for the first (ish) month and every subsequent month by £200. This, as I said earlier, would result in roughly an extra £16 for the term

You could buy a cod and chips, a battered sausage and a cup of tea for that

Rollinghome

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.

Rollinghome

ColdIron 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. 
[SNIP]

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.

You are focussing on the final payment in isolation

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

Timed well they allow you to increase the monthly balance for the first (ish) month and every subsequent month by £200. This, as I said earlier, would result in roughly an extra £16 for the term

You could buy a cod and chips, a battered sausage and a cup of tea for that

Yes, absolutely concentrating on the final 13th payment. The title of this thread is "8% Nationwide Regular Saver - 13 payments?".  And the point that you now seem to agree is that making that final 13th payment is worth a tad more than zilch, so why all the fuss about it.  And why would it be "unsound" to consider it in isolation? Isn't it better to know you're gaining maybe 47p by making it, and certainly not £16.00.

Unfortunately, there tends to be a general fondness for small-time wizard wheezes, that aren't always so wizard. The same old nonsense gets repeated time and again because no-one who knows bothers to correct it.