Santander Easy Access Saver - What to do with it?

simonsmithsays

intalex said:

simonsmithsays said:

intalex said:

Or you can empty it and then do the close option, so no interest lost on the principal, and the correct accrued interest will be paid out when they close it.

But you'll be losing interest in the interest! Which may not be insignificant.

You were never going to earn the interest on the interest until it was paid out, so if any interest is credited during the waiting period it will continue accruing interest until closure and this will reflect in closure proceeds, and if no interest is credited in the waiting period, then on closure you will still earn the right interest accrued on the balances up to the point when you emptied it.

Your way you won't get the interest paid until the end of term and the unpaid interest from the 20th will be earning a lower rate.

My way you get all interest paid at 5.2 and this can be put into a better than 4.2% it drops to.

Hence earning more interest on the interest 

BooJewels

My beer mat calculation concludes that the difference in the interest on the interest between 5.2% and 4.2% if you had £100k deposited would be just under 50p - if the interest was in the account for 5 days once it had dropped rate, that is.

gravel_2

Yeah we're talking a minute amount of money, even if you loaded up the account. Not worth giving yourself an aneurysm over.

intalex

simonsmithsays said:

Your way you won't get the interest paid until the end of term and the unpaid interest from the 20th will be earning a lower rate.

My way you get all interest paid at 5.2 and this can be put into a better than 4.2% it drops to.

Hence earning more interest on the interest 

If any interest is credited during the waiting period, you could empty it out promptly too to avoid earning a measly 4.20%

simonsmithsays

intalex said:

simonsmithsays said:

Your way you won't get the interest paid until the end of term and the unpaid interest from the 20th will be earning a lower rate.

My way you get all interest paid at 5.2 and this can be put into a better than 4.2% it drops to.

Hence earning more interest on the interest 

If any interest is credited during the waiting period, you could empty it out promptly too to avoid earning a measly 4.20%

You aren't understanding what I mean.

I hope someone else can articulate better than I that it's the unpaid interest (or more specifically the reduced interest upon it) until the end of the natural products term that you are losing out on.

Edit - I noticed this on your OP ' and then do the close option'.  

I hadn't noticed this previously...

jaceyboy

Does anyone know if the 'close account' option works for balances over £100k? I just called Santander and they said if its over £100k they charge £25 chaps fee!

BooJewels

I think I got it @simonsmithsays  If you didn't close the account, but only moved the principle elsewhere (although I don't think anyone was actually suggesting doing that) - the interest wouldn't be paid until the maturity date in September and would compound at 4.2%, not 5.2%.  As I said, it's about 10p per day difference on £100k held for 8+ months (something like £3,600 - £3,700 interest).  So by September, the difference would be just over £12.  Actually, a smidge less as it would actually compound at 5%, resulting in a 5.2% AER.

gravel_2

If you have annual interest payment rather than monthly then there will be no compounding. Interest will simply stop accruing if there's no money in the account.

intalex

gravel_2 said:

If you have annual interest payment rather than monthly then there will be no compounding. Interest will simply stop accruing if there's no money in the account.

Exactly, and if you have monthly interest and it gets credited after 20 May and before the account is closed (or left open until end of term) then you simply withdraw that credited interest immediately. There is no situation where any amount (principal or interest) is ever forced to earn 4.20%.

silvercue

I am undecided.  I would like to move to a better rate elsewhere, but have not found one yet that is sufficiently better with access to new joiners etc.

I need to start looking!

When I move money from accounts when interest rate drops - I usually just leave the account empty, unless it automatically closed when balance is zero