a&l reg saver vs current

shazkhan111

Am i correbt in saying that you cannot have the a&l regsaver paying 12% as well as their current account paying 8.5%.

So which is better to have based on £2500 max in current account and £250pm in 12%?

McSaver

250 per month in regular saver would yield 6.5% gross (5.2% AER) when taking an average balance of £1625 for a year. Total Interest £156

£2,500 for a year at 8.5% gross (6.8% AER) in the current account would earn you a total of £170 Interest for a year.

So the current account at 8.5% wins by £14 over a year.

LittleVoice

On the other hand, if you have £2,500 to put into the current account it could also form the basis for drip-feeding from elsewhere into the regular saver. (And you would need another two lots of £250 of course for the final months.) While in the non-A&L account, it could still be earning interest, say at 6% gross. I reckon that's about £56.25 gross extra interest.

In that case, it looks like the savings account is the better option.

knights

shazkhan111 wrote: »

Am i correbt in saying that you cannot have the a&l regsaver paying 12% as well as their current account paying 8.5%.

Yes, here is an extract from their T&C's:-

*Premier Regular Saver with an interest rate of 12.00% gross p.a./ AER is available to customers only at the time of opening a new Premier Current Account. To apply for a Premier Regular Saver account applicants must not hold or have held any A&L current account in the three months preceding a new Premier Current Account application.

DeepSporran

McSaver wrote: »

So the current account at 8.5% wins by £14 over a year.

However, it's not easy keeping exactly £2500 in a current account. If you do use it as a current account with payments going out all the time, it'll be hard to keep the balance at exactly £2500. Anything above £2500 will attract a minimal rate of interest.

Doing a rough calculation, if you manage to keep the balance at an average £2300, the interest will be the same as you'd have got from the 12% regular saver at £250 a month. So provided you keep the average above £2300 (but not very much above £2500) you're winning.

Lavendyr

Plus you have to pay in at least £500 per month to fund the Premier Direct account, so you would have to withdraw and pay in £500 each month which could cut down the interest you earn.

Beate

You could do what I did and deposit £2,500 in the current account and leave it there, then pay in £500 every month and withdraw it again a day or so later. Interest loss minimal as those monies over £2,500 attract 0.1% only anyway. I did not use the A&L current account for anything else and kept my day-to-day finances with a different bank, so basically used the A&L account as a savings account for £2,500.

nicko33

Beate wrote: »

Interest loss minimal as those monies over £2,500 attract 0.1% only anyway.

it's not the loss of the 0.1% to be considered, it's the loss of interest somewhere else if you hadn't had to move it in and out again.
two 3-day transfers loses you 8 days interest because you catch a weekend also.

So you could be losing 8 days of 6%+ every month on £500 (about £8 year?)
Probably worth it for the extra 2.5% on the £2500 for 1 year, (£62.50)

Beate

Not if you transfer it from a bog-standard 0.1% high-street account as I have done, but I do see your point.

Sandy_Beech

Beate wrote: »

You could do what I did and deposit £2,500 in the current account and leave it there, then pay in £500 every month and withdraw it again a day or so later. Interest loss minimal as those monies over £2,500 attract 0.1% only anyway. I did not use the A&L current account for anything else and kept my day-to-day finances with a different bank, so basically used the A&L account as a savings account for £2,500.

I am doing the same as above, could you advise just opened the account, and been given £1,500 o/d limit..... (interest free 12 months) I know its messing about but drip feed 250 a month into e saver from o/d... until i reach max o/d, whilst keeping 2,500 in current at 8.5%... Would this work out ???? yes also deposit 500 then withdraw to avoid the charge....