The Top Regular Savers Discussion Thread

Pickledonionlover

https://forums.moneysavingexpert.com/discussion/comment/82173934#Comment_82173934

Hinkley RS3

Similar here. Completed forms sent second class Saturday and as a new customer my £250 was cashed today.

Top work

Tim_L

https://forums.moneysavingexpert.com/discussion/comment/82173349#Comment_82173349

I always try to open accounts for the first payment at the start of the month if I'm close to it, just for neatness, but it's worth bearing in mind that the interest on the first month amount is miniscule anyway. Say 6.5% RS and a £200 monthly payment, the amount you earn in 31 days is about £1, so opening it mid month doesn't bear a huge cost. The opportunity cost of not getting the RS at all if it's pulled or degraded is much higher.

At least that's the way I sell it to myself. Apologies if I'm explaining egg sucking techniques to the more experienced savers here though.

Bob2000

Yes already have the account 😉

surreysaver

https://forums.moneysavingexpert.com/discussion/comment/82174129#Comment_82174129

It's not the ~£1 in the first month on the £200 you're missing out on, its the fact the account will have £200 more in it for practically a whole year, if you can open the account and pay it in at the closest to the end of the month you can. So nearer ~£12 more.

Although having missed out on a 7% regular saver when I waited a couple of years ago, I tend to open when they become available. By doing this, I now have two or three regular savers which were pulled not long after going on sale, so I believe I've gained more than I've lost.

JamesRobinson48

https://forums.moneysavingexpert.com/discussion/comment/82174129#Comment_82174129

I feel your point has been discussed once or twice on this thread. Your view is an intuitive one, but I believe the consensus has gone the other way.

Let's take your example of paying in £200 pm @ 6.5% interest in a 12 month RS account. Suppose instead you make the first payment on the month's last working day (e.g. 30 Oct), and the second on 1 Nov, then effectively for the entire life of the product you will always have a £200 higher balance in the RS than if your first payment had been on 1 Nov. At 6.5% interest, that £200 increment will earn you an additional ~£13 interest over the 12 months. The outcome does vary just a little according to whether the particular RS happens to accept a 13th monthly payment.

Of course, as you rightly point out, if you think the RS might go NLA while you wait, then the dynamic changes. Some canny folk on here get around that by opening the RS mid month, then closing and reopening it on the month's last business day (if it hasn't gone NLA by then).

Section62

https://forums.moneysavingexpert.com/discussion/comment/82174129#Comment_82174129

I always try to open accounts for the first payment at the start of the month if I'm close to it, just for neatness, but it's worth bearing in mind that the interest on the first month amount is miniscule anyway. Say 6.5% RS and a £200 monthly payment, the amount you earn in 31 days is about £1, so opening it mid month doesn't bear a huge cost.

For calendar-month accounts the optimum strategy is usually to open near the end of a month so there's an initial deposit near month end, and a second deposit as early as possible in the next month. This means you effectively start the term with two months of deposits rather than just the one.

The aim isn't about the interest earned on that initial deposit in the first month, rather that the 'extra' initial deposit will be earning interest through the whole term.

There are exeptions to the rule, and some risks - that the account is pulled before you open it (as you point out), and also if you cut it too fine and delays of some kind mean the new account can't be funded before the month end.

flaneurs_lobster

 …but I believe the consensus has gone the other way

It's not really a matter of the consensus, just arithmetic, as your example shows.

clairec666

https://forums.moneysavingexpert.com/discussion/comment/82174179#Comment_82174179

I take a similar approach to you - I'll usually open an account if the rate is good and I have enough money to fund it. If it's a smaller building society I would risk any delay. Opening at the end of the month may be the "optimum" strategy but if you follow it rigidly you could miss out on some great accounts.

Also, while your calculation showing the ~£12 gain is accurate if you look at that account in isolation, if you look at an overall picture of all your accounts over a longer term end-of-month opening would look less appealing. A lot depends on 1) when you have the money available to fund accounts, and 2) where it's held while you're waiting to fund accounts.

MisterMotivated

I'll try to open at the end of the month to maximise the balance/interest where I can, but, for small building societies, I'll generally open as soon as they're available since I've seen several that have gone NLA very quickly. For banks that use account months rather than calendar months, optimising payment dates is not always an option or it requires technically breaching the account terms. Also, with some banks/building societies, the maturity/opening process can take a few days, meaning the renewal date creeps on each year until you can't reopen before month end.

wmb194

https://forums.moneysavingexpert.com/discussion/comment/82174380#Comment_82174380

Optimum time to open an RS

"…for small building societies, I'll generally open as soon as they're available…"

But even the recent Lloyds Banking Group 8% RS' weren't around for long - a couple of months? - so can't always be relied upon with large banks either.

I can't be bothered with this type of min/maxing, I just open them and fund them ASAP.