The Top Regular Savers Discussion Thread

CrunchyNutCornflakes

pecunianonolet said:

Been reading now several pages with the same issues and problems and reports of success stories after opening the saver in question for the last 20 or so pages. No issues btw. for me opening one when the app was working.

My observations:

- People may have their reasons for not opening or opening and not funding regular savers
- Too much focus on a headline rates in general with in this case high funding allowance too
- Not much considerations on tax
- The impression that for a larger proportion of the demographic posting here tax implications are of less concern with full PSA available or even higher free allowances available e.g. starter rate considerations, only interest income, etc.

As a higher rate tax payer you only have a £500 PSA, however, you my not have the full £20k available in April to fill up your ISA. Now think about how few regular savers you need to cross the £500 PSA limit. Now assume that you keep current accounts at 0 and park some cash here and there e.g. 6% Santander or 5% Cahoot accounts until bills are due. 

As a 40% tax payer, now think about the current CMC ISA rate of 4.59%. That means that 4.59 x 1.66 = 7.6194%

Basically once you have reached your PSA a regular saver would need to pay 7.62% to break even with taxes. In that case, there is no incentive for somebody to open this very generous 7% regular saver with a even more £1000 monthly funding allowance. 

Or in other words, funding only this one reg saver would yield ca £450 interest (next tax year if not closed before and fully funded each month with 12 payments) so with a second reg saver you are already crossing next years PSA, assuming ISA rates stay stable. Of course lower ISA rates make regular savers more favourable.

There are very perfect reasons why people pass on regular savers and just make monthly contributions into their ISA instead, if they can't just put the full lump sum in at once.

You could expand further and say that making enough pension contributions would put you into a lower tax band to gain the full PSA again, we could talk Premium Bonds to park funds, etc. 

Of course, if you can max out your £20k ISA allowance in April, have enough income to fill up a pension and still have enough disposable income left after bills the picture looks different again because 60% after tax is still better than nothing or less elsewhere.

On the contrary, filling up a pension is extremly tax favourable but the money is unaccessible for a long time and reduces your disposable and accessible income in younger years. Think property deposit, high rents while you put money aside, think family, think ever increasing bills, inflation, student load repayments, etc. 

Just leaving this here to broaden the overall conversation with the focus on the many reasons why people decide that regular savers are without doubt amazing but why they not work for everyone or could even provide you with less returns if not all elements are managed well. 

I maxed out last year's ISA, have about £4k left to fund this year, and will potentially fully subscribe next year.

 In addition to that I have some premium bonds that I'm going to withdraw (around 1% return... So unlucky with the prizes.

Although I'll pay some tax on the regular savers, I was a lower tax payer last year, and this year just over the threshold but pension contributions will take me back under.

In addition to the workplace pension, I have another one I'm paying 8% of my salary into

FishInGlass

What @pecunianonolet says makes perfect sense for those who are higher rate tax payers. I don't fall into that bracket and am a 20% tax payer with the £1000 PSA limit.  The vast majority of my regular savers are currently paying at least 6%. I would need to be earning an equivalent 4.8% on any Cash ISA to match that so it makes sense for me to fund these regular savers even though I will earn over the PSA limit this financial year.

WillPS

pecunianonolet said:

Been reading now several pages with the same issues and problems and reports of success stories after opening the saver in question for the last 20 or so pages. No issues btw. for me opening one when the app was working.

My observations:

- People may have their reasons for not opening or opening and not funding regular savers
- Too much focus on a headline rates in general with in this case high funding allowance too
- Not much considerations on tax
- The impression that for a larger proportion of the demographic posting here tax implications are of less concern with full PSA available or even higher free allowances available e.g. starter rate considerations, only interest income, etc.

As a higher rate tax payer you only have a £500 PSA, however, you my not have the full £20k available in April to fill up your ISA. Now think about how few regular savers you need to cross the £500 PSA limit. Now assume that you keep current accounts at 0 and park some cash here and there e.g. 6% Santander or 5% Cahoot accounts until bills are due. 

As a 40% tax payer, now think about the current CMC ISA rate of 4.59%. That means that 4.59 x 1.66 = 7.6194%

Basically once you have reached your PSA a regular saver would need to pay 7.62% to break even with taxes. In that case, there is no incentive for somebody to open this very generous 7% regular saver with a even more £1000 monthly funding allowance. 

Or in other words, funding only this one reg saver would yield ca £450 interest (next tax year if not closed before and fully funded each month with 12 payments) so with a second reg saver you are already crossing next years PSA, assuming ISA rates stay stable. Of course lower ISA rates make regular savers more favourable.

There are very perfect reasons why people pass on regular savers and just make monthly contributions into their ISA instead, if they can't just put the full lump sum in at once.

You could expand further and say that making enough pension contributions would put you into a lower tax band to gain the full PSA again, we could talk Premium Bonds to park funds, etc. 

Of course, if you can max out your £20k ISA allowance in April, have enough income to fill up a pension and still have enough disposable income left after bills the picture looks different again because 60% after tax is still better than nothing or less elsewhere.

On the contrary, filling up a pension is extremly tax favourable but the money is unaccessible for a long time and reduces your disposable and accessible income in younger years. Think property deposit, high rents while you put money aside, think family, think ever increasing bills, inflation, student load repayments, etc. 

Just leaving this here to broaden the overall conversation with the focus on the many reasons why people decide that regular savers are without doubt amazing but why they not work for everyone or could even provide you with less returns if not all elements are managed well. 

This is all valid, but the same applies to every single account mentioned here with the very rare exception of ISA Regular Savers.

If we went through this for each and every new account offered this thread would get very tedious very quickly. 

pecunianonolet

To clarify, I have not with any word said that people not consider taxes and it makes also perfect sense to discuss the details of it at the appropriate places. 

All I was trying to say was that I felt the conversation can be, at times, one dimensional and some get "picked on" when they share reasons why they not open or not fund regular savers. 

I am a higher rate tax payer. I have just withdrawn the full 5k of my RBS/Natwest regular savers and put them into my ISA with CMC. I just didn't have the funds early in the year so it is time to shift funds into my ISA and have stopped funding many or withdrawn from them. 

 

t1redmonkey

Just wanted to check, can you definitely hold the Monmouthshire App Exclusive Regular Saver alongside the Monmouthshire Branch Exclusive Regular Saver or is it one or the other you have to choose?  Wording on the product pages sounds like you can have both, just wanted to check here though to be certain!

mon3ysav3r

t1redmonkey said:

Just wanted to check, can you definitely hold the Monmouthshire App Exclusive Regular Saver alongside the Monmouthshire Branch Exclusive Regular Saver 

Yes, many of us do

Born2Save_3

t1redmonkey said:

Just wanted to check, can you definitely hold the Monmouthshire App Exclusive Regular Saver alongside the Monmouthshire Branch Exclusive Regular Saver or is it one or the other you have to choose?  Wording on the product pages sounds like you can have both, just wanted to check here though to be certain!

After unsuccessfully trying to activate my second Regular Saver Issue 8, opened by post, by requesting a signature form, I was informed by Charlie that the the new exclusive regular savers were available.  I specifically asked if there were any restrictions on having both the App and Branch Exclusive regular savers and was told that there is not.  The Branch exclusive RS has a maximum deposit of £500 a month.  I was told it cannot be opened by post.

MonBS has some agencies in England near Bristol, at Clevedon and at Portishead.  There are Mon BS branches close to the Wales end of both the Severn bridges at Chepstow and Caldicot.

I'm tempted to have a cheap coach day trip to Wales as the interest on the Branch Exclusive RS may be over £200.  Better than going to Gravesend for another Kent Reliance RS at 5.1%..

If any one has any suggestions or workarounds on opening branch only accounts when not that close, please do share.

WillPS

There's also a MonBS agency in Hereford.

allegro120

pecunianonolet said:

To clarify, I have not with any word said that people not consider taxes and it makes also perfect sense to discuss the details of it at the appropriate places. 

All I was trying to say was that I felt the conversation can be, at times, one dimensional and some get "picked on" when they share reasons why they not open or not fund regular savers. 

I am a higher rate tax payer. I have just withdrawn the full 5k of my RBS/Natwest regular savers and put them into my ISA with CMC. I just didn't have the funds early in the year so it is time to shift funds into my ISA and have stopped funding many or withdrawn from them. 

You probably know this, but I will mention it anyway - funds with CMC are not protected by FSCS.  The risk is very low, but still worth to bear this in mind.  I have only 4% of my ISA funds in CMC, but it's just me being  overly risk-averse.  I am going to increase it though, now the dust has settled it's the time to transfer 4.1% Tembo out, CMC will get a fair proportion of it. 

Bridlington1

FishInGlass said:

What @pecunianonolet says makes perfect sense for those who are higher rate tax payers. I don't fall into that bracket and am a 20% tax payer with the £1000 PSA limit.  The vast majority of my regular savers are currently paying at least 6%. I would need to be earning an equivalent 4.8% on any Cash ISA to match that so it makes sense for me to fund these regular savers even though I will earn over the PSA limit this financial year.

In addition there's also the scenario of someone having no income and thus being able to earn £18,570 in savings interest without paying tax, in this case you'd need to have a 6-figure sum in regular savers before you need to start paying tax on the interest and it makes sense to look at the top rate irrespective of whether it's an ISA or not.