HSBC Regular Save 8% AER

lipidicman

cjn wrote:

Lots of questions lipidicman (sorry!), I'm just getting a bit confused by it all.

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Is a 'month' defined as a calendar month or a month from opening?

I opened my Hx RSA (i.e. paid in the first installment) on 24th July. I had always assumed that each 'month' lasted from 24th-23rd, and that it was during this period that it was neccesarry to put in the £25-£250. However if a month starts on the 1st regardless, then I could presumably have paid £250 on 24th July, another £250 on 1st August and thereafter to 1st July 2006 (i.e. a total input of £3250), as though there were 13 months in the year!

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Ok, with Halifax its 'per calendar month' so you could have put the first SO in on the 1st August. But you must not put that 13th payment in, it will bounce. So you hold it until the account rolls over (ie pay in on the 26th of july rather than the 1st july). I was misinformed and told to let it pay in - it appeared and then vanished to clearing. Next year I will hold it back

cjn wrote:

How did you arrive at the £146.83 figure? I've rerun the calculation on Excel and now my annual interest seems to only be £128.47. There may well be an error in my logic, although I got there thus:

Day 1 month 1: I input £250. At the end the mth I have 250*1.08^(1/12) = 251.61.
Day 1 month 2: I input another £250, giving £501.61. Now 501.61*1.08^(1/12) = £504.84 at the end of month 2.
Day 1 month 3: Add another £250 to give £754.84...

AND SO FORTH.

At the end of month 12, I have £3128.47, of which £128.47 is interest.

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Ok, I assumed £500 as the opening balance (ie £250 on the last day of the month and £250 the following day). Then continue as normal, remembering to multiply by 1.08^(1/12) TWICE at the end (you withold that thirteenth payment)

cjn wrote:

One final question: At what point is the tax withdrawn from the account? Is the interest calculated daily with 20% taken by the taxman there and then, or is it deducted in one fell swoop when the account closes such that I am only entitled to 80% of my earnings.

TAX before or after

This wont make much difference but yes basically 20% of what is paid to you is taken by the taxman (so that the taxman benefits from compounding too!)

thor

lipidicman wrote:

Then you take the tax off.....

I've gone for all the regular savers, except this one. The requirement to pay your income into HSBC is the real catch, even Abbey didn't insist on this and they let you save £500 a month at 7%

If you have an HSBC current account your first step should be to get something better.

I have an HSBC current account with my salary being paid into it and my first step is to transfer most of the money in it to high rate saving accounts as there is no current account around which can match the best instant saving rates. I only leave a small amount to cover direct debit payments and everything is done online. Overall with HSBC 8% RS & current account I am making more than if I had these accounts elsewhere. The best tip is always to move spare cash out of a current account into a higher paying savings account.

lipidicman

OK, but the transfers to these savings accounts will probably take a few days. So there is loss of interest. Better to go for a bank paying 4% on the current account and 4.5% on an instant saver for sweeping and saving into ISAs and regular savers at 7% with a bank that dont insist on you having a rubbish current account IN MOST CASES. The best savings rates are 5.4% so the current accounts aren't that far off, and a lot better than HSBC. You have to have something in your current account, so why not get a better one?

The HSBC option is just too inflexible for me really, but if it works for you then great!