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Zopa Rainy Day Saver - interest received seems lower than advertised
Hello. I opened a Zopa account in January. My primary motivation in doing so was to allow to me to open the linked Rainy Day Saver, which advertises a market-leading 7.1% interest rate. I deposited the maximum £300 allowed on the day I opened the account. After a month, I received only £1.68 in interest. This seems lower than what I would expect to receive on an account paying 7.1% interest. Have I somehow misunderstood or miscalculated the interest which has been accrued? Can any other members who have a Zopa account allay my concerns regarding this matter?
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7.1% is the AER (which means interest is compounded over the course of a year).
As it pays interest monthly, you need to use the gross rate of 6.87% if working out what you're going to be paid monthly.
The AER and gross would both be the same if interest was paid annually, so the figure of AER is only there to allow you to compare different accounts with each other.
How much were you actually expecting to receive? Zopa pays interest based on the statement date of your current account with them, so unless you happened to open the regular saver on the same date of the month as your current account monthlyversary, it would only be a part payment of a month as well
I consider myself to be a male feminist. Is that allowed?1 -
On which day did you open the account? You probably didn't have the £300 in the account for a full 31 days. At 6.87% £1.68 is closer to 30 days.
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It's a few pence lower than I got. I opened a new one on 5th December, put £300 in straight away, interest recd 4th Jan £1.75, which is correct for 30 days interest at 7.1%.
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Sounds about right to me, depending on the exact dates you opened the account and when the interest was paid. .
In a year, £300 will pay £300 x 0.071 = £21.30 interest.
Divide that by 12 and you get £1.775 a month.
But not all months are the same length so if the interest is paid on a particular day each month you'll get different amounts each month.
It will also depend on if the quoted interest rate is conditional on the interest remaining in the account for the rest of the year, as that will add to the amount you are getting interest on.
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7.1% is the AER and to account for interest compounding, the equivalent monthly rate is approx 6.87%. Hence the calculation is as below.
£300 x 6.87 / 100 x 30 days / 365 days = £1.69
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As @surrysaver said, 7.1% is the AER rate, you will need to use the gross rate of 6.87% (as it compounds monthly).
300*(0.0687/12) = £1.72
Since you received £1.68, it's likely you have lost a days interest (e.g. the bank may have taken a day to actually give them the cash despite depositing it on the day the account opened).
The good bit is next month you'll earn interest on the £300 and the £1.68 interest (and any other deposits you make).After a month, I received only £1.68 in interest. This seems lower than what I would expect to receive on an account paying 7.1% interest. Have I somehow misunderstood or miscalculated the interest which has been accrued?
How much did you expect to receive? Even mistakenly using the AER gets you to ~£1.78 max.
If you had wildly more then it points to a miscalculation. I've included an indication of what you should be receiving below (assuming maximum contributions).Please note that this and the above are simplified calculations based on the bank calculating interest monthly. In reality they calculate the interest daily (but pay it monthly) meaning you'd receive more interest in longer months and less in shorter months. If you wanted, you could adjust these calculations to be 300*((0.0687/365)*X), with X being the number of days in the month. Using the below though is a good ballpark and is likely to only be few pennies off (or a couple of £ at the end).
Know what you don't2 -
Just one thing, the reg saver is only 6 months now, that’s why I’ve not bothered to renew mine.
So many people do not understand reg savers interest, but still open them.
That amazes me.
Anyone want to buy London Bridge ?.
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Assume I have the Principality 6mth RS and the COOP and Virgin 7% RS ones already, and £20k earmarked to go into an ISA come April 6, but still got some spare £300 a month. Why wouldn't I put that £300 into Zopa over the next 6 months?
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Sorry perhaps I'm one of the people you are referring to - why would you not bother to renew yours? ~7% is still a better rate than you get most other places.
I generally find the opposite is true - people who do not understand regular savers conclude that they're bad (because they mistakenly calculate the interest rate by dividing the total interest by the closing balance, coming to the incorrect conclusion that Regular Savers pay half the stated interest rate, while forgetting that they didn't have their closing balance in the account for the whole year, and that money could have been generating interest elsewhere).
I did a long-ish post about it here:https://forums.moneysavingexpert.com/discussion/6623595/to-use-regular-savers-or-not/p2
Unless you're referring to the faff of opening an account, just for the sake of ~£15-£20 (actual amount depends on the interest rate of the account the money would have been in otherwise).Don't forget First Direct - 7% (AER & Gross) on £300 p/m.
I'm on my 4th one I believe.Know what you don't1 -
The Zopa isn't as good value as it was coming down from 12 months to six. However you are still getting a decent rate for 6 months. I was lucky and managed to renew for 1 year, but that was in December. Not sure when they changed the deal.
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