I'm 17 and need some help ..

hustle90

Hey.
I've recently opened a Internet Saver account with Barclays and put £1000 into the bank.
When I was at school, we was never taught anything about banking/savings (Which I think we should do) so I'm just wondering how the interest etc works...

I can't get onto the Interest Rates on the Lloyds TSB website as I'm getting an error ''An error occurred on the server when processing the URL. Please try again later.'' however lets just say its 3.0 AER/Gross .. how much interest am I earning a month and year?...

I've never understood AER/GROSS/Interest rates,,, If anyone could help me understand this a little more, I'd appreciate it a lot.

Thank you.

kingmonkey

http://www.moneysavingexpert.com/banking/interest-rates

hustle90

Thank you. So 3% interest is £30 a year with a £1000 saving?.

debbie42

hustle90 wrote: »

Thank you. So 3% interest is £30 a year with a £1000 saving?.

If you're looking at the AER rate, yes. The gross rates can deviate slightly due to the compounding effect. The AER rate is the one to look at if you are comparing different accounts.

Have you see Martin's guide to cash for teenagers?
[SIZE=-1]www.moneysavingexpert.com/attachment/teen_cash_guide.pdf[/SIZE]

margaretclare

Hustle90, I can't believe you didn't do 'simple interest' and 'compound interest' at school. I've recently done GCSE Maths, even at my advanced age, and these topics were certainly taught.

Basically, if you have £1000 and you put in into a bank account which, you're told, has a certain percentage interest rate per year, say 6% for argument's sake. If you leave that £1000 alone for a year it will have grown to £1060. You leave it alone for a further year, and the £1060 will have grown by another £63.60, making the total £1123.60.

Complications arise when the interest rate the bank is offering you goes up and down according to the Bank Rate as decided by the Bank of England, or when you add money or take it out and it's not in there for a complete year, so the example doesn't work. But basically, the principle is there.

The same thing works in reverse if you owe money e.g. on credit cards, loans or any other form of debt. The interest is racking up monthly, month-on-month, and before you know it you owe huge amounts, much larger the amount you maybe owed in the beginning, taking out a storecard to buy a few clothes - it can get out of control before you know it. So it's very, very important to understand these principles, understand how they can work FOR you and also how they can work AGAINST you if you're not terribly careful.

Best wishes

Margaret

tawse57

There are much better places for your £1000 than the appalling, IMPO, interest rate Barclays are offering. I am a great believer in Nationwide whose esaver, I believe, is paying 5.5% at the moment and Nationwide is considered as one of the most stable 'banks' out there.

I am not a financial expert but I suggest you look into the likes of the Nationwide, the Yorkshire building society and others. Here are links to best saving accounts interest rates.

http://www.thisismoney.co.uk/bestsavingsrates

http://www.moneyfacts.co.uk/savings/bestbuys/internet-savings-accounts.aspx

http://www.moneysupermarket.com/savings/

margaretclare

Hustle90, I apologise most unreservedly if what I wrote causes you any heartache. I have intended nothing but helpfulness.

Quite often what is taught in schools does not have the same relevance to what you find when you come to open your first savings account, but it certainly does get taught, maybe not in Maths, perhaps under Personal and Social Development, or whatever it's called.

Martin's idea of a 'savings fountain' is one of the simplest and best ideas I've seen in a long time. Basically, you put as much into a cash ISA as you can afford, £3,600 a year will be allowed from April, and you pay no tax on that interest. Any interest you gain anywhere else will be taxed. It's also worth knowing that you pay a much higher percentage interest rate on debts than you do on savings, which is another reason why it's so important to understand the principle of compound interest.

HTH

Margaret

Aegis

There was nothing rude about her post in my view. Please just drop it, as pestering someone is incredibly rude in itself, especially when the forum moderators have already decided that your post was unwarranted and had it removed.

Try giving the benefit of the doubt in this case, and if you think something's rude, why not point it out in a polite manner rather than trying to get a rise out of an obviously very much appreciated member of the forum ( Thanked 2,615 Times in 1,425 Posts)