Regular saver account or account I can pay higher amounts into?

reg091

I have £600 available to save a month. After a bit of research I was grabbed by the headlines "Virgin Regular Saver Fixed 10% interest..."

It seemed a no brainer at first glance. However, the max monthly deposit is £250 meaning £3000 PA = £162 interest.

However, I see the best regular savings fixed rate is 5.% (Habib Bank Zurich) and if I paid my full £600 in there a month that would mean £7,200 PA = £198 interest.

I am looking for a sanity check really; is my logic above roughly correct, that despite the 10% rate the monthly deposit cap makes the Virgin account not worth it if you have more than that available to invest monthly?

gravel_2

Have a play about with the drip feed options here: https://www.moneysavingexpert.com/savings/regular-savings-calculator/

It is technically always better to have both types of account and drip feed the regular saver if the regular saver has a better %. 

EDIT: Sorry misunderstood the OP. With only 600 a month you may actually find it better to open multiple regular savers instead. Virgin is an outlier but you can get 7% from other providers.

soulsaver

VM is by far the top rate but 5.0% is nowhere near 2nd... so continue research here:
https://forums.moneysavingexpert.com/discussion/6106986/regular-savings-accounts-the-best-currently-available-list

flaneurs_lobster

Why not put £250/mth into the Virgin 10% and the remaining £350 into HBZ (or another regular saver/s)?

jameseonline

£600 to save a month

£250 in Virgin a month

£600 - £250 = £350 left 

£350 you could use to fund a First Direct or something and still have money left.

reg091

flaneurs_lobster said:

Why not put £250/mth into the Virgin 10% and the remaining £350 into HBZ (or another regular saver/s)?

Because I would get more if I put it all into HBZ (or similar), non-regular saver wouldn't I?

Descrabled

My technique would be to deposit the maximum amount at the highest interest, followed by the largest amount at the next highest interest, and so on to the maximum amount available.

So Virgin £250 @ 10%, Coop £250 @ 7%, and Halifax £100 @ 5.5%; Total £600 @ 8% gives about £310 interest.

Lots of different accounts available.

Alternately, If you want to use Virgin £250 @ 10%, and leave the rest in easy access @ 4% say. This will give £600 @ 6.5% about £250.

flaneurs_lobster

reg091 said:

flaneurs_lobster said:

Why not put £250/mth into the Virgin 10% and the remaining £350 into HBZ (or another regular saver/s)?

Because I would get more if I put it all into a 5% regular saver, wouldn't I?

No. Why would you think you would? You would be getting 10% on £250 and 5% on £350 as opposed to 5% on £600.

reg091

OP here: here's what I can't get my head around:

Regular saver pays highest interest but I can't stick all £600 a month into a regular saver because of the monthly deposit cap. So, even though they pay higher interest I won't make as much as if I stick the full £600 a month in a normal savings account, even though it pays less interest.

Doesn't seem right to me...

reg091

Descrabled said:

My technique would be to deposit the maximum amount at the highest interest, followed by the largest amount at the next highest interest, and so on to the maximum amount available.

So Virgin £250 @ 10%, Coop £250 @ 7%, and Halifax £100 @ 5.5%; Total £600 @ 8% gives about £310 interest.

Lots of different accounts available.

Alternately, If you want to use Virgin £250 @ 10%, and leave the rest in easy access @ 4% say. This will give £600 @ 6.5% about £250.

That's the one! That makes sense. Use as many of the regular savings accounts as possible!

eskbanker

reg091 said:

OP here: here's what I can't get my head around:

Regular saver pays highest interest but I can't stick all £600 a month into a regular saver because of the monthly deposit cap. So, even though they pay higher interest I won't make as much as if I stick the full £600 a month in a normal savings account, even though it pays less interest.

Doesn't seem right to me...

As explained above, that isn't right!  If you put as much money as you can into the best-paying accounts as soon as possible then that earns the most interest....