Gross rate on the Bradford & Bingley e-savings?

Shinds

Hi all,

Could anybody quickly confirm the (monthly) interest rate on this account. Bradford & Bingley eSavings.

Thanks

Speculator

From B&B website.

Open an eSavings account and make the most of your money. Act now and start earning interest with our 0.25% gross p.a. bonus for the first 6 months, making our rate a very competitive 5.5% gross p.a./5.38% AER.

 

Unbelievable_2

Shinds

I think B&B's website is pants! It is not that simple to 'google' up anything on it - and whilst it says that interest can be monthly or yearly it only gives a p.a. rate as Speculator points out. Do we assume the monthly/annual rates are the same - very unusual if that's so ???

paulspenceley

I also couldnt find this out from their website when I applied last week, so I emailed them.

They emailed back very promptly to say that the monthly rate was lower than the annual one. I cant remember the exact figure I'm afraid, but it was somewhere in the region of 0.25% lower (I went for the annual interest).

Robert_Sterling_3

The annual rate is 5.25%
There is a bonus of .25% for six month.
So for six months only the rate is 5.50%
For some reason which almost defies belief they are allowed to say that makes the rate 5.5% p.a.
It does not.
After six months it becomes 5.25% per annum.
The fact that the true rate never really is 5.5% per annum is revealed by the AER being shown as 5.38%
This figure is probably a rounded up figure from 5.375%
which would be related to the 5.25% for 6 months and 5.50 for six months.

One reason for not quoting the monthly rates might be the fact that there is one monthly rate for the first six months and a lower rate for the next six months.

Acturial monthly rate equivalent for first six months is 0.0447167%
and for next six months is 0.004273128%

But these are monthy interest rates and have to be compounded so they do not and should not add up to the 5.38% quoted.

They actually add up to 5.247%

In any case I do not expect anyone actually uses monthly rates because months to not have a standard length. They use daily rates. I have set this out in a couple of earlier posts.

As every school girl knows a monthly rate of 1%, even though somewhat fictional, is actuarially equivalent to 12.6825% per annum approximately.

OK?

Shinds

Oops - forget to mention.

When I spoke to Bradford & Bingley - They confirmed that if I wanted the Interest paid monthly - The rate is: 5.37% Gross pa.  This rate is including the 0.25% bonus for the first 6 months.

Not bad I suppose.  ::)

Anybody else used this account to store away stoozed cash? Are you happy with it?  ;)

Unbelievable_2

shinds

Does it have to be monthly interest. Egg are doing 5.5% for 6 months on their savings account - the interest is paid at the end of the 6 months.

Robert_Sterling_3

What rate after 6 months?

Unbelievable_2

A not so thrilling 4.75% I'm afraid - but it's easily moved :-/

Shinds

shinds

Does it have to be monthly interest. Egg are doing 5.5% for 6 months on their savings account - the interest is paid at the end of the 6 months.

They do annual as well - And the rate is 5.5% Gross pa. - Again this includes the extra 0.25% bonus rate - But this is only for the first 6 months.

MarkyMarkD

I don't agree with Robert at all.

The rate on the product he describes IS 5.5% pa for the first six months, and then reduces to 5.25% pa.

The "pa" rates are the effective rate for each period of time.

The AER, on the other hand, is the annualised equivalent rate, which is quite rightly shown as 5.38% (or 5.375%).

You can close the account after six months and you've earned 5.5% x 6/12. So the rate for those six months IS 5.5%. It does what it says on the tin.