Monthly or Annual Interest Question

Parisian

Over the last year, I have opened various instant access saving accounts... moving my money when a better one comes out.
I always go for the annual interest payment, and now I have about 4 empty accounts where I am waiting for the anniversary for the interest and to close it.

How do other savers here handle this? Is there a better way?

Do some of you instead go for monthly interest?
I was thinking about that, as am going to open a FirstSave account:


AccountGross rate p.a.Net rate p.a.AEREasy Access savings accountsEasy Access monthly interest6.09%4.87%6.26%Easy Access yearly interest6.26%5.01%6.26%


I note that the monthly interest is a bit lower. Is this actually the case, or does it all work out in the end that you receive the same interest?

Thanks!

Parisian

Oops I just realised that the rates table messed up... sorry!

Perhaps a link is better:
http://www.firstsave.co.uk/accounts/

Basically, was trying to say the monthly interest rates are lower.

chesky369

I go for monthly interest simply because I like the psychological boost of seeing my money grow - brings out the gardener in me. I think that, unless you have hundreds of thousands (perhaps you do), the difference between annual and monthly interest is bu----r all. But why are you waiting for the anniversary to close the account - the bank will calculate it up until that date won't they? I don't think you have to actually wait until the year is up if you close it.

debbie42

chesky369 wrote: »

But why are you waiting for the anniversary to close the account - the bank will calculate it up until that date won't they? I don't think you have to actually wait until the year is up if you close it.

I was wondering the same thing, from the first post. Unless there are specific t&c which say otherwise, you'll always get your interest to date applied when (or soon after) you close an account.

earlgrey_3

On that account the gross for monthly is 6.09 and for annual is 6.26 which both give an AER of 6.26. But AER is the Annual Equivalent Rate and the monthly rate will only be equivalent to the annual rate for a full year period.

With instant access you can close either at any time. With yearly interest the AER will be just the same but if you close a monthly interest account at any time other that at a year the AER will be slightly less. So normally yearly interest is the best option.

If you've got no penalty instant access accounts with no money in them close them to get the interest paid to you asap. Then you can put the interest in another account to get interest on your interest.

Parisian

Ahhhhh, fantastic!! Thanks for the replies... .I can't believe I was keeping open all these accounts until the anniversary, hahahah
Just closed my Sainsbury's account... & now on to the B&B....

fkelanne

could i ask what are the best monthly intrest saving accounts you all use? im just starting and wanting to save in a month intrest account too?

chesky369

I like ICEsave and ignore the doomsayers about the Icelandic economy - I always put less than £35k in any one account anyway.
The Alliance and Leicester e-saver is also good.