Conflict of Interest

FunLovinCriminal

Morning all

Background: We borrowed 10k from my parents to buy a car. Very amicable, and they are not putting under any pressure to pay them back.

Situation: We set up a 3.65% savings account that pays monthly, and compound interest on the interest. Currently £2k in there earning £7 interest at the moment, and we pay £170 into it monthly. Aim is to pay parents back in 5 years. We are in year 2.

Current: Bank has opened a 5.50% monthly saver. Interest is annual and the money would need to come from Current Account. Deposits need to be £20-250 a month. Interest paid 1yr after opening.

Maths question. Would we be better paying the £170 in to our advantage saver each month with the gradual increase in monthly interest? Or moth balling the advantage saver and paying into the Monthly Saver? We can only make 3 withdrawals from the advantage saver, so would just leave it earning interest at 3.65%.

Which way would enable us to reach the £10k quickest?

We know we could probably earn more with other banks, but want to keep as simple as possible due to other personal situations

Thanks in advance

Bigwheels1111

Why not open regular savers, Principality 8%, £200 a month for 6 months.
Each of you opens one, leave the rest in the best paying easy access account, or Trading 212 easy access isa at 4.9%
Thats what I do.

Select rate order, where it says sort. Regular savers.

https://moneyfactscompare.co.uk/savings-accounts/regular-savings-accounts/?quick-links-first=false&product-favorites-first=false&sort-order=AER&sort-order-text=Rate

Easy access isa, Rate order again. Trading212 is offering 5.03% for new customers.

https://moneyfactscompare.co.uk/isa/easy-access-cash-isas/?quick-links-first=false&product-favorites-first=false&sort-order=AER&sort-order-text=Rate

Easy access, rate order again.

https://moneyfactscompare.co.uk/savings-accounts/easy-access-savings-accounts/?quick-links-first=false&product-favorites-first=false&sort-order=AER&sort-order-text=Rate

Mr.Generous

Rough estimate, monthly interest say £10, the interest on this would be at 3.65% so 36p A YEAR, monthly paid in about 3p that's your compound. So yes, the 3p now gets interest on it but the value is so low I can't see it getting close to an account paying 5.5%, the interest is paid on the ave daily balance so each year you are losing out on interest on the 3p's - about 60 of them, so under £5 (this is just quick mental maths but I wont be far out. Month 1 the 3p will attract interest 11 more times, month 2, 10 more times so 11+10+9 etc) and the £5 compounding starts at 3p and ends at £5 so for interest call it £2.50 for the full year. Your compound is 3.65% of £2.50 if I'm right. It'd be interesting if a comparison tool was available to stick the numbers into, some maths fan might come along and work it out exactly for you.

I know where your coming from, I like monthly interest myself. A year is a long time to wait to see the return, but I think the higher rate would be your best financial return.

flaneurs_lobster

Why not pay your parents £170 a month and let them decide where to save their money? They are down £10k in capital plus the ~4.5%  they could be earning in interest (say £450/year).

You'll have to increase the amount saved (or repayed) substantially if you want to repay that loan in 5 years.

FunLovinCriminal

£170 a month 60 months is £10,200 - we are trying to get the money to work for us to pay it back sooner, but limiting  our options due to personal reasons, and use one bank to do this

flaneurs_lobster

FunLovinCriminal said:

£170 a month 60 months is £10,200 

Of course it is, my apologies - shouldn't try and do sums in my head early doors.

masonic

The simple answer to your question is to prioritise the account paying the highest AER rate. It would be sensible to remove money from the lower rate account to make up to the £250 limit if you cannot otherwise fully fund it.

EthicsGradient

Bigwheels1111 said:

Why not open regular savers, Principality 8%, £200 a month for 6 months.
Each of you opens one, leave the rest in the best paying easy access account, or Trading 212 easy access isa at 4.9%
Thats what I do.

Select rate order, where it says sort. Regular savers.

https://moneyfactscompare.co.uk/savings-accounts/regular-savings-accounts/?quick-links-first=false&product-favorites-first=false&sort-order=AER&sort-order-text=Rate

Easy access isa, Rate order again. Trading212 is offering 5.03% for new customers.

https://moneyfactscompare.co.uk/isa/easy-access-cash-isas/?quick-links-first=false&product-favorites-first=false&sort-order=AER&sort-order-text=Rate

Easy access, rate order again.

https://moneyfactscompare.co.uk/savings-accounts/easy-access-savings-accounts/?quick-links-first=false&product-favorites-first=false&sort-order=AER&sort-order-text=Rate

Anyone else getting a "your connection isn't private" privacy error from moneyfactscompare? (I get the same going via a Google search result - it's not just the URL given here) They're not the kind of organization I'd expect to let security certificates get out of date.

flaneurs_lobster

EthicsGradient said:

Bigwheels1111 said:

Why not open regular savers, Principality 8%, £200 a month for 6 months.
Each of you opens one, leave the rest in the best paying easy access account, or Trading 212 easy access isa at 4.9%
Thats what I do.

Select rate order, where it says sort. Regular savers.

https://moneyfactscompare.co.uk/savings-accounts/regular-savings-accounts/?quick-links-first=false&product-favorites-first=false&sort-order=AER&sort-order-text=Rate

Easy access isa, Rate order again. Trading212 is offering 5.03% for new customers.

https://moneyfactscompare.co.uk/isa/easy-access-cash-isas/?quick-links-first=false&product-favorites-first=false&sort-order=AER&sort-order-text=Rate

Easy access, rate order again.

https://moneyfactscompare.co.uk/savings-accounts/easy-access-savings-accounts/?quick-links-first=false&product-favorites-first=false&sort-order=AER&sort-order-text=Rate

Anyone else getting a "your connection isn't private" privacy error from moneyfactscompare? (I get the same going via a Google search result - it's not just the URL given here) They're not the kind of organization I'd expect to let security certificates get out of date.

Yep, guess their certs have lapsed (or a techie has done something bad during some w/end maintenance).

masonic

Apparently they read the forum, now fixed.