First Direct 7% con

buster414

My account matured. £300 per month x 12 so £3600 saved @ 7%.  My interest was £135 around 4% !!!!
Oh, it’s how the interest is calculated said customer support, your fault for not reading the small print. Learn from my mistake 😩

Bradden

I'm not sure what the issue is? Are you disappointed you didn't get interest for the whole year on money deposited during the year? 

Emmia

It's well known that monthly savers interest rate works out at about half of the headline, this is because you don't have the full £3,600 (or whatever)  in the account for the full 12 months.

Dazed_and_C0nfused

buster414 said:

My account matured. £300 per month x 12 so £3600 saved @ 7%.  My interest was £135 around 4% !!!!
Oh, it’s how the interest is calculated said customer support, your fault for not reading the small print. Learn from my mistake 😩

Not sure if you are being serious or not!

You put £300 into First Direct for one month.  They paid you 7% on that.  You had use of the remaining £3,300.

You then added another £300 the following month so they paid you 7% on £600.  You had use of the remaining £3,000.

You then added another £300 the following month and they paid you 7% on £900.  You had use of the remaining £2,700.

And so on each month until the last one when First Direct had the whole £3,600 and paid you 7% on that.  For one month.

If you think you can do better (from a genuine bank or building society) please do let us know how.

friolento

It is not a con. Your interest rate is 7%, as advertised.

Just you do not get interest on money you haven't deposited. In the same way as you wouldn't pay interest for money you haven't borrowed.

You can read more about Regular Savers here: https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/

There is also specific Regular Saver forum: https://forums.moneysavingexpert.com/discussion/6106986/regular-savings-accounts-the-best-currently-available-list/p1

Badboi

They are correct, you earn the 7% on £300 the first month, £600 the second month, etc, not 7% on £3600! 

On regular savings, the interest you get will be about half the interest rate of the account. But don't worry, it's not a con – it's just how the maths works out. It's all down to the money being saved monthly rather than in one lump sum.

This has caused confusion and disappointment in the past, with some complaining that they've received less interest than they thought they would. Yet that's because they expected the wrong amount, not because they were underpaid. Here's an example (though for ease we've used an unrealistic interest rate)...

Mr Matt Mattics and his £3,000 savings

Matt has saved a total of £3,000 in a regular savings account paying 10% interest over a year.

What does Matt expect to earn? His simple sum works out that he's put £3,000 in at 10%, therefore he should earn £300 in interest.

Why is this wrong? Matt only had £3,000 in there for the last month; it took a year to build up to that amount. You only earn interest on money in the account. So after the first month he was earning the 10% on just £250, halfway through the year he was earning it on £1,500.

Barkin

Only the first £300 was in the account for 12 months. 
The full £3600 was only in the account for a month. 

friolento

Emmia said:

It's well known that monthly savers interest rate works out at about half of the headline, this is because you don't have the full £3,600 (or whatever)  in the account for the full 12 months.

The rate is the rate advertised, not half of it. If it was half, it would be advertised as such, and the amount of interest paid woud be substantially less.

kimwp

It's not a small print thing, it's you not understanding how savings accounts work.

On all interest earning accounts-
You get interest on money in the account. If your money isn't in the account, you won't earn interest on it. If your money is only in the account for half the year, you will only get half the interest that you would if your money had been in the account for the full year.

In a regular savings account
One of your deposits has been in the account the full year, but the last one has only been in the account one month and the deposits in between for 11, 10, 9 etc months between.

oldernonethewiser

If there is a bank paying interest on money that is not deposited with them I am definitely interested

Zanderman

buster414 said:

My account matured. £300 per month x 12 so £3600 saved @ 7%.  My interest was £135 around 4% !!!!
Oh, it’s how the interest is calculated said customer support, your fault for not reading the small print. Learn from my mistake 😩

As others have said, you're misunderstanding the situation.

The key point, which I'm not sure others have explicitly said, is that the interest rate is per year. That is 7% per annum.  7% will be paid on money that's been there 12 months.

A regular saver, by definition, only has money deposited monthly. And so, part from the first month's deposit, most of the money isn't there for a full year.  Second payment is only there for 11/12 of a year and so on.