First Direct 7% con

MisterMotivated

I find if funny how, in these threads, so many people feel the need to explain clearly how regular savers work and that the OP has misunderstood, despite the 5+ posts before theirs all explaining clearly how regular savers work and that the OP has misunderstood

Dazed_and_C0nfused

Zanderman said:

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.

Not sure that is actually helping.

I've checked my First Direct regular saver and 7% has been paid on it all, irrespective of whether it was earning interest for 1 month or 12 months.

Yes 7% for one month is less interest than 7% for 12 months will be but it's still 7%.

Zanderman

MisterMotivated said:

I find if funny how, in these threads, so many people feel the need to explain clearly how regular savers work and that the OP has misunderstood, despite the 5+ posts before theirs all explaining clearly how regular savers work and that the OP has misunderstood

Indeed so many of us do. And also try and modify and clarify each other's explanations.

As I did to others above.

And now Dazed (above) has to me.

It is an extraordinary phenomenon.

Not least as, in many similar previous cases, the OP may never respond so we don't even know if our multiple and multi-corrected efforts are worth it.  

daveyjp

For regular savers divide the rate by 2 for a fag packet calculation of how much you will receive if you deposit the same amount each month for a full 12 months.

(£300*12) * (7/2) =

£3,600 * 3.5% = £126

plus a few quid compound interest.

TheBanker

First Direct's website is broken at the moment, but most banks who offer regular savers will include a table showing how much interest you can expect to earn. Here is an example, from HSBC's Regular Saver (which pays 5%):



I am sure First Direct will have a similar table.

So not a 'con' - rather a failure to read and understand the information provided before applying for an account.

(NB: If you expect to receive interest on money that's not in your account,are you also happy to pay credit card interest on money before you spend it?)

Bridlington1

TheBanker said:

First Direct's website is broken at the moment, but most banks who offer regular savers will include a table showing how much interest you can expect to earn. Here is an example, from HSBC's Regular Saver (which pays 5%):



I am sure First Direct will have a similar table.

So not a 'con' - rather a failure to read and understand the information provided before applying for an account.

(NB: If you expect to receive interest on money that's not in your account, are you also happy to pay credit card interest on money before you spend it?)

The website's working ok for me and you are correct that such a table does exist:

daveyjp said:

For regular savers divide the rate by 2 for a fag packet calculation of how much you will receive if you deposit the same amount each month for a full 12 months.

(£300*12) * (7/2) =

£3,600 * 3.5% = £126

plus a few quid compound interest.

For a slightly more accurate rough calculation I multiply the final balance by 13/24 and then multiply by the rate:

£300*12*13/24= £1950 (average balance)

£1950*0.07=£136.50 interest earned, matching the FD table.

ColdIron

MisterMotivated said:

I find if funny how, in these threads, so many people feel the need to explain clearly how regular savers work and that the OP has misunderstood, despite the 5+ posts before theirs all explaining clearly how regular savers work and that the OP has misunderstood

It's a kindof sport around these parts, we never tire of it

surreysaver

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 😩

Where was the money before it was in the regular saver each month and how much interest was it earning?

surreysaver

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.

Its not half the headline. It is the headline. Its the amount in the account - averaged over the year its about half what you have at the end

surreysaver

daveyjp said:

For regular savers divide the rate by 2 for a fag packet calculation of how much you will receive if you deposit the same amount each month for a full 12 months.

(£300*12) * (7/2) =

£3,600 * 3.5% = £126

plus a few quid compound interest.

There's not going to be any compound interest because it doesn't pay interest monthly