First direct savings accounts

isasmurf

SparciaM wrote: »

Are they any calculators out there to check how much you'd make from accounts?!?

Yes.... on first direct's website

SparciaM

Using FD calculations:

If went for their reg saver I'd earn £104 on £3000 doing £250pm.

But if I put my initial £2000 into a 6.4% account and added £150pm then onwards giving me £3000 after a year, I'd earn £677 - so this showing that FDs reg saving is actually loosing me £573!!! This can't be right, can it!!!

Or if I just put £3000 sitting in their 5.25% everday e-saver account I'd earn £161 - so giving me £57 more, than if I used their 8% regular saver!!!! So this is showing that regular savers or just FD one is actually a loser and not as good.!!!!!

johnmoney05

SparciaM wrote: »

Using FD calculations:

If went for their reg saver I'd earn £104 on £3000 doing £250pm.

But if I put my initial £2000 into a 6.4% account and added £150pm then onwards giving me £3000 after a year, I'd earn £677 - so this showing that FDs reg saving is actually loosing me £573!!! This can't be right, can it!!!

Or if I just put £3000 sitting in their 5.25% everday e-saver account I'd earn £161 - so giving me £57 more, than if I used their 8% regular saver!!!! So this is showing that regular savers or just FD one is actually a loser and not as good.!!!!!

If you have £2000 at the moment and want to save the whole. I will choose Yorkshire BS - Regular Saver. Their interest rate is 6.85%. Put the max £500 each month for the first few months, then you can save the min £10 for the rest of the term.
Of course you can also look for the fixed rate account. Or A&L e-saving account is doing 6.5% for the first year.

SparciaM

How can a lower interest rate 5.25% everday e-saver and 6.5 a&l account give me more money than FD 8% account? I would've thought that Fd EEG saver would give u more?!?!

johnmoney05

This is because of the "time value of money".

Value of £2,000 today is not equal to the value of next year of £2,000.

SparciaM

john that doesn't answer the question! I asked how a 5.25% acc can give a better return than an 8% acc! Surely the higher rate the higher the return!

oldfella

you are not comparing like with like - the RS increases the amount in the account each month.

SparciaM

It does, but I have a max of £3000 and the max return is £104. Yet using the FD savings calculator for other accounts ranging from 5.25% and 6.4% I actually will earn more interest than the reg saver at 8%.

The only reason why I put into the RS is because I thought being 8% I'd get more of a return, but looks like I'm wrong and I'll actually be losing money.

It doesn't what account I compare to, the fact is I have £3000 to invest and at the end of a year I wanted to know what I'd get back and looks like the RS 8% is actually the worst account.

Maybe I should put into a high interest account and then transfer into an ISA.

Aegis

SparciaM wrote: »

It does, but I have a max of £3000 and the max return is £104. Yet using the FD savings calculator for other accounts ranging from 5.25% and 6.4% I actually will earn more interest than the reg saver at 8%.

The only reason why I put into the RS is because I thought being 8% I'd get more of a return, but looks like I'm wrong and I'll actually be losing money.

It doesn't what account I compare to, the fact is I have £3000 to invest and at the end of a year I wanted to know what I'd get back and looks like the RS 8% is actually the worst account.

Maybe I should put into a high interest account and then transfer into an ISA.

You're comparing the wrong calculations. If you want to compare the two accounts, you have to calculate the interest on the "holding account" where your lump sum will sit to be syphoned off into the regular saver.

Essentially the interest calculation will look something like this (assuming monthly interest on both accounts for the moment) for month 1:

I = [(£3000-£250)*0.0525 + £250*0.08]/12
I = £13.70

Of course, it would help to look at the interest rates for the particular accounts on a monthly basis, and from that to work out the overall effective interest rate. I've done this on an Excel sheet right now, and have worked out that transferring from a 5.25% account into an 8% regular saver has a total effective interest rate of 5.47% in the first month and 7.9% in the last month, which is what you'd expect. The important thing to note is that even in the first month, the overall interest rate is better than the holding account you pick.

For a 6.5% holding account the effective interest rate starts at 6.63% in the first month. Not bad really!

nicko33

see also "Is a regular savings account better?"
http://forums.moneysavingexpert.com/showthread.html?t=728285