Regular Saver Accounts

clairec666

Exodi said:

I have seen (and regrettably know) many people who think that when you go into a new tax bracket, you are charged tax at this new rate on your entire income. One of my friends told me he refused a pay rise for this reason and unfortunately from being on this forum for a decent chunk of time, I know he's not the first to think this.

E.g. ithey think f you earn £12,569, no tax is payable, whereas if you earn £12,570, 20% tax is payable on everything, e.g. £2,514 in tax.

I guess it's easy to get confused if you've not been educated properly on how taxation works, and unfortunately these kinds of skills aren't taught in schools.

Also compare it to carers allowance, where you lose ALL the benefit if you earn just a penny over the threshold. But that's a topic for another day...

badmemory

If they taught some of these basic life/financial skills it would actually save the country money.  When you consider all those questions that so many do not know the answers to, that so many have to get letters about & so many get problems with.  It could be they could even sort out some things for their parents too - so a win win situation.  In fact ignorance is bliss is the very opposite of the truth in real life.

VXman

I'm addicted to Regular Savers. I totted them up today and realised that between me and my wife we save £4150 per month into reg savers!! 

I'm retired so this comes out of pension income and other savings accounts/investment income. (Some of this in turn funded by 0% purchase credit cards.)  The pain is the organisation of them. Too many mature in Sept - Dec period so we sometimes find funds running short.

I'm not sure of the benefit overall. Some of this money is sitting in instant access accounts waiting to go to the regular saver, sometimes I draw down from a SIPP. It might be simpler to have a fixed access account or keep invested.

Also, last year I earnt to much interest for tax!!

trickydicky14

VXman said:

I'm addicted to Regular Savers. I totted them up today and realised that between me and my wife we save £4150 per month into reg savers!! 

I'm retired so this comes out of pension income and other savings accounts/investment income. (Some of this in turn funded by 0% purchase credit cards.)  The pain is the organisation of them. Too many mature in Sept - Dec period so we sometimes find funds running short.

I'm not sure of the benefit overall. Some of this money is sitting in instant access accounts waiting to go to the regular saver, sometimes I draw down from a SIPP. It might be simpler to have a fixed access account or keep invested.

Also, last year I earnt to much interest for tax!!

Come on, you can be more addicted than that, my current deposits are over 7k a month and others will tell you they have a bigger one then me and they do.

Kim_13

My addiction is best measured in terms of number of accounts open, rather than amount as I can only afford to fund them all if something is maturing. Excluding Principality Issue 2 and Saffron Members’ Month which are fully funded awaiting maturity, I have 14 on the go, having just sent off for a Melton Issue 5. 16 if I count the Monmouthshire Exclusive which is yet to see any additional funding and the Coventry Loyalty I funded for the prize draw.

Initially I had thought that I’d get my Issue 6 changed into one on maturity, thereby keeping the passbook proper that came with that, but then figured it would be a bit of a push for that to still be available in September 2026. So being a fan of open ended Regular Savers and being more likely to be able to afford to fund it in June, August and December, off the application went. 

I also snagged a Fixed ISA with a longer funding window for any other overflow.

Eco_Miser

carrotmuseum said:

I often see recommendations for high interest regualr savr accounts. Please note the interest is calculated based on the money in your account at the time of calculation, not the final lump sum at the end of the term. . So if the claimed interest rate is, say 6% the first payment only accrues 1/12th of 6%

 1/12th of 6% of what? Over the year it accrues 12/12 of 6% of that first payment 

the second balane get 2/12ths and so on.

You've changed from payment to balance, no wonder you're getting confused. The second payment gets 11/12 of 6% of the second payment, which is fine, because you're only lending the bank that payment for 11 months, and the 6% is an ANNUAL rate. Similarly, the third payment gets 10/12 of 6% of the third payment, because it's only for 10 months, and so on down to the last payment which only gets 1/12 of 6% of the last payment, for just 1 month in the account.

So the ACTUAL interst paid out at the year end is significantly less than 6%

  Again,  6% of what?  It's actually 6% of the average balance over the year, which is a little more than half the final balance. Alternatively, it's 6% of the final balance paid for the 6 months that the payments were in the account on average.

e.g. A regular saver account with a 7% AER might sound appealing, but if interest is calculated monthly and you save £100 a month, your average savings balance over the year will be around £600. The actual interest earned will be about half of the advertised rate, potentially around 3.5%. 

So, by your logic a 4% pa instant access saver would be better?  But if you save £100 a month, your average savings balance over the year will be around £600, half of the £1200 you end with, so the actual interest earned will be about half of the advertised rate, potentially around 2% pa.

A general point: far too many people quoting an interest rate, give a percentage, not a rate. They forget that a rate specifies a fraction of the principal and a period of time. So it should be 6% per annum, or in plain English six hundredths (of the amount on deposit) each year, or 6/36500 of the daily balance per day.