AER vs APR - Help ?

PCarter99

Hi,

I have a basic query. Apologies if it's been answered before...

I have a VirginOne mortgage, the interest rate is 6.3% (APR I believe)
I have a shiny new Kaupthing savings account 6.5% (AER)

Let's say I have a zero balance in my mortgage account (no debt).
If I transfer £10k to my Kaupthing account, and maintain a £-10k balance in my Virgin account, will I make money (0.2% maybe) or lose money over a year ?
Can anyone do the sums ?

tomstickland

Make money.

YorkshireBoy

What's your tax status?

Aegis

PCarter99 wrote: »

Hi,

I have a basic query. Apologies if it's been answered before...

I have a VirginOne mortgage, the interest rate is 6.3% (APR I believe)
I have a shiny new Kaupthing savings account 6.5% (AER)

Let's say I have a zero balance in my mortgage account (no debt).
If I transfer £10k to my Kaupthing account, and maintain a £-10k balance in my Virgin account, will I make money (0.2% maybe) or lose money over a year ?
Can anyone do the sums ?

Lose money, unless you're a non-taxpayer claiming interest gross.

It's a valid tactic that people are using with 0% credit cards and good savings accounts, it's just that the figures don't work for most people in this case because savings interest is taxed while there's no relief or anything on mortgage payments.