regular saving accounts

Bridlington1

JAV39 said:

Are regular savings account worth it? the interest % are good but can only put £150- £400 per month max. As they pay annual interest, i assume you lose out on compounding interest.
So are you better off just putting in the best % interest account?
Had money in an isa which was paying rubbish% so trying to maximise (10K)

It's when you open several regular savers that things can get interesting (no pun intended). I currently have 28 regular savers that allow some penalty free withdrawals/early closure which pay 5.25% or more. If I maxed all these out I could be paying £9,125/mth into accounts paying 5.25% that I could access without penalty if I wished. I've another 4 that either have penalties for or do not allow early withdrawals/closure paying 5.5%+ (another £1,350/mth of regular saver capacity) and even then there's some regular savers in this region I've not got for one reason or another that are available. If you include accounts that I have on the minimum funding sat idle in case they come in useful later on my collection sits at 38 regular savers with over £16k of potential monthly deposits capacity.

I think they're worth it and with a decent enough spreadsheet they are quite easy (albeit sometimes long-winded) to manage. I've spent the last 2 years with the bulk of my savings in regular savers. My collection is about to be scaled back pretty drastically though as I'll be needing the funds shortly, I used to have close to 50 regular savers at one time.

Whether they're worth it for you and on what scale will depend on your circumstances, personal tax situation, how much you have in cash savings, how much you are adding to your savings etc as well as how much admin you are prepared to do. If you don't mind (or even quite enjoy) the admin, have a lot of cash savings and don't have to worry about paying tax on savings interest then they'll likely have a greater appeal than if you're an additional rate taxpayer who can currently put all of their cash savings in ISAs and likes to have everything in one place.

friolento

I currently have over £60k in 30 Regular Saver accounts, depositing over £7,000 a month, all at least 5.15% AER but some as high as 9%. It requires a moderate amount of time to set up and manage, a little discipline, and a spreadsheet. I find it rewarding.

njkmr

Im not sure i could manage all them accounts personally but my question is 
Do you not end up paying a lot more tax on the interest earned on these rather than having the money in ISA,s ?
Im new to all this .

Middle_of_the_Road

njkmr said:

Im not sure i could manage all them accounts personally but my question is 
Do you not end up paying a lot more tax on the interest earned on these rather than having the money in ISA,s ?
Im new to all this .

They will be more attractive to anyone with no/low earned income. If you earn less than £18,570 a year from income and savings interest, then all your savings interest will be tax-free thanks to tax-free savings and the starting savings rate.

Tax-free savings: check if you're eligible - Money Saving Expert

Bridlington1

njkmr said:

Im not sure i could manage all them accounts personally but my question is 
Do you not end up paying a lot more tax on the interest earned on these rather than having the money in ISA,s ?
Im new to all this .

It depends on your circumstances. I'm a student with a large amount of savings, whilst I've been at uni my only income has been a part time job, paying around £4k/yr, a bursary, savings interest and the student maintenance loan (the latter is not classed as income for tax purposes). Consequently for the last few years I've been in the position where I can save a lot and not have to worry about paying tax as my income for tax purposes has been very low and as a result it has made no difference whether my savings have been in ISAs or not.

In this position ISAs have no real advantage to them, I've not had to pay any tax on the interest either way, so funding pretty much any regular saver which pays more than the top easy access account is a pretty good option.

On the flip side if you are an additional rate taxpayer, ISAs would become much more favourable. Assuming you had a cash ISA paying 5.1%, you'd be needing a non-ISA account to pay over 9% to earn you the same amount of interest post tax so you'd be right in that having the money in ISAs would be the better option and you could end up paying a lot more tax on the interest if you went for the regular saver-heavy approach in this instance.

friolento

ISAs and Regular Savers aren't mutually exclusive. In fact, there are Regular Saver ISAs, and you are also free to feed any easy access ISA on a monthly basis, in the same way you would feed a Regular Saver. You can have an ISA alongside Regular Saver, and/or other savings accounts.

With ISAs, you are limited to a maximum of £20k deposits for a year.

Whether you chose an ISA or other savings accounts, or both, depends much on your personal circumstances.

trickydicky14

Bridlington1 said:

njkmr said:

Im not sure i could manage all them accounts personally but my question is 
Do you not end up paying a lot more tax on the interest earned on these rather than having the money in ISA,s ?
Im new to all this .

It depends on your circumstances. I'm a student with a large amount of savings, whilst I've been at uni my only income has been a part time job, paying around £4k/yr, a bursary, savings interest and the student maintenance loan (the latter is not classed as income for tax purposes). Consequently for the last few years I've been in the position where I can save a lot and not have to worry about paying tax as my income for tax purposes has been very low and as a result it has made no difference whether my savings have been in ISAs or not.

In this position ISAs have no real advantage to them, I've not had to pay any tax on the interest either way, so funding pretty much any regular saver which pays more than the top easy access account is a pretty good option.

On the flip side if you are an additional rate taxpayer, ISAs would become much more favourable. Assuming you had a cash ISA paying 5.1%, you'd be needing a non-ISA account to pay over 9% to earn you the same amount of interest post tax so you'd be right in that having the money in ISAs would be the better option and you could end up paying a lot more tax on the interest if you went for the regular saver-heavy approach in this instance.

Sorry If I come over stupid but could you explain the maths / figures behind the 5.1% ISA and the 9% non ISA thanks.

MX5huggy

An additional rate tax payer pays 45% tax. 

So on £10000 earning 9% interest they would get £900 of interest but pay 45% tax on that so keep £495 paying £405 in tax. 

Alternatively they could put it in an ISA where £10000 would earn tax free interest as long as the interest rate is 5% or more they will earn £500 or more tax free which is better than paying tax on 9% interest. 

JAV39

Does anyone have the Natwest digital regular savers account?
Can only put in £150 per month max, my question is if the interest is paid monthly, does that mean the following month i wont be able to put in the full £150?

Bridlington1

JAV39 said:

Does anyone have the Natwest digital regular savers account?
Can only put in £150 per month max, my question is if the interest is paid monthly, does that mean the following month i wont be able to put in the full £150?

Interest is paid monthly and doesn't count towards the £150/mth. Also you can top the account up further by using double round ups, which also doesn't count towards the £150/mth.