Savings interest calculation.

DealDiver

Hello, I'm looking at a regular saver account with a limit of £500 monthly deposits at 4.5% AER/gross.

I must be getting it wrong. 12x £500 monthly deposits would total £6000. Then, I presumed 4.5% interest would be added to that, totalling £6,270. (£270 interest).

However, the bank's webpage displays £6,145.48 as the estimated balance after 12 months based on £500 monthly deposits?.

What am I misunderstanding?. Thanks.

Wonka_2

DealDiver said:

Hello, I'm looking at a regular saver account with a limit of £500 monthly deposits at 4.5% AER/gross.

I must be getting it wrong. 12x £500 monthly deposits would total £6000. Then, I presumed 4.5% interest would be added to that, totalling £6,270. (£270 interest).

However, the bank's webpage displays £6,145.48 as the estimated balance after 12 months based on £500 monthly deposits?.

What am I misunderstanding?. Thanks.

Mainly the fact that you’re not paying in £6k up front therefore you’re not earning 4.5% of £6k for the whole year 

masonic

It's been a while since we've had one of these.

What you are misunderstanding is that you only earn interest on money that's actually in the account. In month 1, the balance will be a maximum of £500. Only in month 12 will you hold the full £6000 if you maxed it out each month.

Veteransaver

Because you don't have 6000 in there for the whole year!

Dazed_and_C0nfused

DealDiver said:

Hello, I'm looking at a regular saver account with a limit of £500 monthly deposits at 4.5% AER/gross.

I must be getting it wrong. 12x £500 monthly deposits would total £6000. Then, I presumed 4.5% interest would be added to that, totalling £6,270. (£270 interest).

However, the bank's webpage displays £6,145.48 as the estimated balance after 12 months based on £500 monthly deposits?.

What am I misunderstanding?. Thanks.

That you have only given the bank £500 in month 1.

And another £500 in month 2

And do on.

You will be getting 4.5% on the money they have the use of.  Not the money that is still in another account you have somewhere else.

Saver73

DealDiver said:

Hello, I'm looking at a regular saver account with a limit of £500 monthly deposits at 4.5% AER/gross.

I must be getting it wrong. 12x £500 monthly deposits would total £6000. Then, I presumed 4.5% interest would be added to that, totalling £6,270. (£270 interest).

However, the bank's webpage displays £6,145.48 as the estimated balance after 12 months based on £500 monthly deposits?.

What am I misunderstanding?. Thanks.

This may help.  You don't have to input an email address and the provider's website assumes you are a basic rate taxpayer

https://www.moneysavingexpert.com/savings/regular-savings-calculator/

After saving £500 a month for 1 year and 0 months, you'll have a total of £6,145 including £145 in interest

Digital_Payback

DealDiver said:

Hello, I'm looking at a regular saver account with a limit of £500 monthly deposits at 4.5% AER/gross.

I must be getting it wrong. 12x £500 monthly deposits would total £6000. Then, I presumed 4.5% interest would be added to that, totalling £6,270. (£270 interest).

However, the bank's webpage displays £6,145.48 as the estimated balance after 12 months based on £500 monthly deposits?.

What am I misunderstanding?. Thanks.

You may find this Nottingham B. S. Page useful for all such calculations. 

https://www.thenottingham.com/tools-and-calculators/regular-savings-calculator

Saver73

or his calculator as it gives a breakdown

https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

jaypers

OP’s first post. I do wonder if this is a wind up to get us all going again