Yearly savings fixed interest accounts

pearsoda

Two of my savings plans with fixed interest have recently matured. However, the interest calculations were incorrect and would have left me out of pocket.

The first was a Club Lloyds Monthly Saver with a fixed rate of 6.25% for the year. Lloyds changed it to an instant saver when it matured after a year so when I closed the account I only got interest at the lower interest rate. They should have applied the yearly interest before they changed the Monthly Saver account. I am chasing this up with them.

The second was a fixed rate yearly Cash ISA with Santander. I opened it in the previous tax year with £500 then put £4,000 at the start of this tax year. When it matured after a year they only applied interest to the amount put in this tax year. I have queried this with them and they admitted that I should have received interest on the total amount, £4,500, at the end of the tax year.

The moral of this post is check that the interest you receive applies to the total in the account and at the correct interest rate!
 

Barkin

pearsoda said:

The first was a Club Lloyds Monthly Saver with a fixed rate of 6.25% for the year. Lloyds changed it to an instant saver when it matured after a year so when I closed the account I only got interest at the lower interest rate. They should have applied the yearly interest before they changed the Monthly Saver account. I am chasing this up with them.
 

I'd be very surprised if they've got it wrong. 

For reference, the max £4800 (12 x £400/month) would give interest of £150-£160.

What are your numbers? 

RG2015

pearsoda said:I

Two of my savings plans with fixed interest have recently matured. However, the interest calculations were incorrect and would have left me out of pocket.

The first was a Club Lloyds Monthly Saver with a fixed rate of 6.25% for the year. Lloyds changed it to an instant saver when it matured after a year so when I closed the account I only got interest at the lower interest rate. They should have applied the yearly interest before they changed the Monthly Saver account. I am chasing this up with them.

The second was a fixed rate yearly Cash ISA with Santander. I opened it in the previous tax year with £500 then put £4,000 at the start of this tax year. When it matured after a year they only applied interest to the amount put in this tax year. I have queried this with them and they admitted that I should have received interest on the total amount, £4,500, at the end of the tax year.

The moral of this post is check that the interest you receive applies to the total in the account and at the correct interest rate!
 

@Barkin has already commented on Lloyds, but I am surprised that Santander got the interest wrong. What were the numbers on this one?

pearsoda

Hi Barkin,

Thanks for your reply.

I had saved £4,000 in my Club Monthly Saver over the year so should have received £250 in interest at 6.25%. However, after the account was changed to a Standard Saver, I only received £146 when I closed the account. Surely this is wrong?

pearsoda

Hi RG2015,

Thanks for your reply.

I opened a fixed Cash ISA on 31/03/23 with £500. At the end of that tax year I got 6p interest. I then put in £4,000 on 20/04/23 and at the end of the next tax year got £178.55. Having recalculated my interest at 4.15% this now does seem to be about right. I had not allowed for the 3-week delay in depositing the £4,000.  

Sarahspangles

If you saved £4,000 over the year the average amount over the year was £2,000 which at 6.25% is £125. The difference will be because you normally get an extra payment in the first month (open mid-month, and contribute again on 1st of next month) plus a bit for the period after it reverted to a lower rate

Barkin

pearsoda said:

Hi Barkin,

Thanks for your reply.

I had saved £4,000 in my Club Monthly Saver over the year so should have received £250 in interest at 6.25%. However, after the account was changed to a Standard Saver, I only received £146 when I closed the account. Surely this is wrong?

No, sounds about right to me. 

You only get the full year interest on the first monthly deposit. 
The second month's deposit only gets 11 months interest. 
The third... 10 months... etc.

You won't get 12 months interest on £4000 if that sum was only in the account for a month. 

Angelica123

pearsoda said:

Hi Barkin,

Thanks for your reply.

I had saved £4,000 in my Club Monthly Saver over the year so should have received £250 in interest at 6.25%. However, after the account was changed to a Standard Saver, I only received £146 when I closed the account. Surely this is wrong?

It looks the interest received is correct and you have just misunderstood how regular savers works. The whole £4000 was not in your savings account for 12 months so you won't get 6.25% x 4000. 

pearsoda

Thanks Angelica,

After some thought I had come to the same conclusion. In my naivety I had assumed that the interest would be paid on the final amount not allocated by how much was in my account over the year.

You live and learn!

Dave