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13th Regular Savings Payment Trick
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allegro120 said:masonic said:allegro120 said:masonic said:Effectively you are extending the length of the 13th calendar month, which is the month where the most interest is earned, by shortening the first calendar month, when very little interest is earned. So you get X extra days interest on 12x the monthly deposit. Delaying from 15th to 28th would equate to an extra £6.40ish on a 6% RS allowing £250pcm, minus what you could get on those last 13 days in an easy access account. You'd probably be a couple of quid up in the end.
We don't know how the rates and availability of accounts might change, so let's try a hypothetical scenario. RS and feeder EA rates never change and the same RS is available in 12 month time. £250 deposits are credited on the same day. EA is 5% and RS is 6%.
Version 1. I open and fund RS on 15th Jan, make 13 £250 payments, collect capital and interest on 15th Jan next year and start the new one.
Version 2. I open RS on 15th Jan, delay my first deposit until 30th Jan, make 13 £250 payments, collect capital and interest on 15th Jan next year and start the new one.
Do I not loose on the difference between 5% and 6% for the first 15 days?The opening deposit always earns the same amount of interest on an annual regular saver. Unless you deliberately forfeit interest by not paying in the maximum amount on day 1 of the account year. In the first calendar month, you earn the least interest and in the last calendar month you earn the most interest. Think about the sequence of interest payments you'd receive if interest were paid monthly on 1st of each month and at maturity. The middle 11 calendar months would be the same regardless of opening day, only the first and last would be different.Version 2 above doesn't make sense. It should read "I open the RS on 30th Jan" to match what is being discussed. You then do lose the difference between 5% and 6% on £250 for 15 days (10p), but gain the difference between 6% and 5% on £2,500 for 15 days on the other side (£1.03). That's comparing renewing the RS with £250 after having £2,750 in there for just 15 days vs 30, which compares like for like over the full 380 days under consideration.
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allegro120 said:masonic said:allegro120 said:masonic said:Effectively you are extending the length of the 13th calendar month, which is the month where the most interest is earned, by shortening the first calendar month, when very little interest is earned. So you get X extra days interest on 12x the monthly deposit. Delaying from 15th to 28th would equate to an extra £6.40ish on a 6% RS allowing £250pcm, minus what you could get on those last 13 days in an easy access account. You'd probably be a couple of quid up in the end.
We don't know how the rates and availability of accounts might change, so let's try a hypothetical scenario. RS and feeder EA rates never change and the same RS is available in 12 month time. £250 deposits are credited on the same day. EA is 5% and RS is 6%.
Version 1. I open and fund RS on 15th Jan, make 13 £250 payments, collect capital and interest on 15th Jan next year and start the new one.
Version 2. I open RS on 15th Jan, delay my first deposit until 30th Jan, make 13 £250 payments, collect capital and interest on 15th Jan next year and start the new one.
Do I not loose on the difference between 5% and 6% for the first 15 days?The opening deposit always earns the same amount of interest on an annual regular saver. Unless you deliberately forfeit interest by not paying in the maximum amount on day 1 of the account year. In the first calendar month, you earn the least interest and in the last calendar month you earn the most interest. Think about the sequence of interest payments you'd receive if interest were paid monthly on 1st of each month and at maturity. The middle 11 calendar months would be the same regardless of opening day, only the first and last would be different.Version 2 above doesn't make sense. It should read "I open the RS on 30th Jan" to match what is being discussed. You then do lose the difference between 5% and 6% on £250 for 15 days (10p), but gain the difference between 6% and 5% on £2,500 for 15 days on the other side (£1.03). That's comparing renewing the RS with £250 after having £2,750 in there for just 15 days vs 30, which compares like for like over the full 380 days under consideration.
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masonic said:allegro120 said:masonic said:allegro120 said:masonic said:Effectively you are extending the length of the 13th calendar month, which is the month where the most interest is earned, by shortening the first calendar month, when very little interest is earned. So you get X extra days interest on 12x the monthly deposit. Delaying from 15th to 28th would equate to an extra £6.40ish on a 6% RS allowing £250pcm, minus what you could get on those last 13 days in an easy access account. You'd probably be a couple of quid up in the end.
We don't know how the rates and availability of accounts might change, so let's try a hypothetical scenario. RS and feeder EA rates never change and the same RS is available in 12 month time. £250 deposits are credited on the same day. EA is 5% and RS is 6%.
Version 1. I open and fund RS on 15th Jan, make 13 £250 payments, collect capital and interest on 15th Jan next year and start the new one.
Version 2. I open RS on 15th Jan, delay my first deposit until 30th Jan, make 13 £250 payments, collect capital and interest on 15th Jan next year and start the new one.
Do I not loose on the difference between 5% and 6% for the first 15 days?The opening deposit always earns the same amount of interest on an annual regular saver. Unless you deliberately forfeit interest by not paying in the maximum amount on day 1 of the account year. In the first calendar month, you earn the least interest and in the last calendar month you earn the most interest. Think about the sequence of interest payments you'd receive if interest were paid monthly on 1st of each month and at maturity. The middle 11 calendar months would be the same regardless of opening day, only the first and last would be different.Version 2 above doesn't make sense. It should read "I open the RS on 30th Jan" to match what is being discussed. You then do lose the difference between 5% and 6% on £250 for 15 days (10p), but gain the difference between 6% and 5% on £2,500 for 15 days on the other side (£1.03). That's comparing renewing the RS with £250 after having £2,750 in there for just 15 days vs 30, which compares like for like over the full 380 days under consideration.4 -
Can l ask a question that isn't really about this thread.
I opened a natwest digital regular saver and put the max £150 in the first month, but from now on, I'll only be putting £100 will l gain much by doing this?
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[Deleted User] said:Can l ask a question that isn't really about this thread.
I opened a natwest digital regular saver and put the max £150 in the first month, but from now on, I'll only be putting £100 will l gain much by doing this?
Where would you keep your £100 if you didn't put it into the 6.12% account?
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In my current account.
The only reason lve got the natwest account is l had the switch offer and l needed/wanted a regular/monthly saver.
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[Deleted User] said:In my current account.
The only reason l've got the NatWest account is l had the switch offer and l needed/wanted a regular/monthly saver.
I would move the entire contents of your current accounts into savings accounts ASAP, you're currently in effect throwing interest down the drain by keeping money in there.2 -
Bridlington1 said:[Deleted User] said:In my current account.
The only reason l've got the NatWest account is l had the switch offer and l needed/wanted a regular/monthly saver.
I would move the entire contents of your current accounts into savings accounts ASAP, you're currently in effect throwing interest down the drain by keeping money in there.
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[Deleted User] said:Can l ask a question that isn't really about this thread.
I opened a natwest digital regular saver and put the max £150 in the first month, but from now on, I'll only be putting £100 will l gain much by doing this?1 -
@[Deleted User]
If you put £100 into your Natwest Digital Saver on the first of each month, and keep the money in there, you will have earned £39 after a year - if Natwest keep the interest rate at 6.12%. Assuming your current account pays no interest, you would have earned nothing - and you might even have spent some or all of your monthly £100.
If you use the COOP or First Direct Regular savers, you can make £45 as they pay 7%. First Direct is a Fixed Rate, too - and they pay you at least another £45 if you open their pre-req current account via Topcashback. Unfortunately, their current switch offer ends tomorrow, so unless you want to dive in at the deep end and request to switch your existing current account today, you won't get another £175 on top of it. But you should be able to bag £45 + £45 = £90, even without a switch
You can use the Moneysavingexpert Regular Saver calculator to play with different scenarios for the Regular Savers.
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