To transfer or not to transfer?

James_Bond_007

Good evening ladies and gentlemen,
May I have a moment to ask a few questions.

Say I have £80,000 in a savings account (Saver v1) with bank earning 4.5% interest.

Say  the same bank offers another account (Saver v2) giving 4.55% interest.

The temptation (as the small interest rate rise which is meaningful for the £80,000) is to transfer from Saver v1 to Saver v2.

Q1)Overall will there be a profit or loss?

Q3)The way I see things is, that in the transfer from moving from one account to another, at least 1 day interest is lost – am I correct?

Q4)Hence I do not think it is worth the transfer - correct?

Q5)Any thoughts or suggestions (e.g. what increase in interest should a transfer be made)?

Thanks for you time.

masonic

It depends on the account (and how long the money earns interest at the better rate before rates change again). There may be no loss of interest if faster payments are made between the institution in question and your linked account, and the receiving account credits the money straight away. I don't think I'd make such a transfer for a 0.05% rate difference. Maybe 0.1% if I thought the existing account would continue to lag behind. You may not be able to transfer £80k in one go, depending on the providers involved. If you can transfer direct from one to the other then that would usually be an instant transfer.

wmb194

James_Bond_007 said:

Good evening ladies and gentlemen,
May I have a moment to ask a few questions.

Say I have £80,000 in a savings account (Saver v1) with bank earning 4.5% interest.

Say  the same bank offers another account (Saver v2) giving 4.55% interest.

The temptation (as the small interest rate rise which is meaningful for the £80,000) is to transfer from Saver v1 to Saver v2.

Q1)Overall will there be a profit or loss?

Q3)The way I see things is, that in the transfer from moving from one account to another, at least 1 day interest is lost – am I correct?

Q4)Hence I do not think it is worth the transfer - correct?

Q5)Any thoughts or suggestions (e.g. what increase in interest should a transfer be made)?

Thanks for you time.

My highlight in your comment; saver v2 is with the same bank? You probably wouldn't lose a day's interest if it was sent on a weekday by faster payments or Chaps to another bank/BS - check the account terms but these days you normally earn interest from the day of deposit - let alone an internal transfer between accounts at the same bank.

Roger175

4.5% on £80k = £3,600
4.55% on £80k = £3,640

So £40 difference on a full year. Simply not worth all the hassle.

Angelica123

There are other accounts with even more competitive rates than 4.55% if you are considering moving the money. 

Albermarle

Roger175 said:

4.5% on £80k = £3,600
4.55% on £80k = £3,640

So £40 difference on a full year. Simply not worth all the hassle.

Agreed. The law of diminishing returns applies here. Plus the £40 will probably get taxed and just a delay of one day would cost £10.

allegro120

James_Bond_007 said:

Good evening ladies and gentlemen,
May I have a moment to ask a few questions.

Say I have £80,000 in a savings account (Saver v1) with bank earning 4.5% interest.

Say  the same bank offers another account (Saver v2) giving 4.55% interest.

The temptation (as the small interest rate rise which is meaningful for the £80,000) is to transfer from Saver v1 to Saver v2.

Q1)Overall will there be a profit or loss?

Q3)The way I see things is, that in the transfer from moving from one account to another, at least 1 day interest is lost – am I correct?

Q4)Hence I do not think it is worth the transfer - correct?

Q5)Any thoughts or suggestions (e.g. what increase in interest should a transfer be made)?

Thanks for you time.

Don't know the bank in question.  There might be exceptions, but normally internal transfers are instant and you shouldn't lose any interest.

A1) Profit.
A3) Very unlikely, but best to read t&c and/or call them and ask.
A4) Probably not.
A5) Any increase is better than no increase.