A&L Esaver

moneymanuk

Hi Guys
I have an A&L eSaver account currently paying 6.50% interest. I had to make a withdrawal this month for something important.. now I know I don't receive any interest in a month when a withdrawal is made, however it states on their site 'The AER will be lower if you withdraw. ' can anyone elaborate on what this means for me, and whether I will go back to earning regular interest next month or if the rate will considerably drop?
Thanks

Baldur

AER is the annual equivalent rate which you receive if your money is compounded daily/monthly over the year, so any month when you don't receive interest is bound to reduce the AER.

Oblivion

Don't panic! AER means “annual equivalent rate”. It shows the true rate of interest you will have received by the end of the year taking into account the regularity that interest is added to the account.

Consequently, if you withdraw a sum in any month and the terms of your account say you lose all or some interest in any month that money is withdrawn, it stands to reason that the AER will be less that year because you have forfeited one month's interest. BUT, and to allay your fears, any month that you do not withdraw funds, you will still receive the full published amount of gross interest.

moneymanuk

Right, I think I understand. So.. let's say this month had I not of withdrawn, I'd of earned say £5.00 interest on the balance of the account. Now I've withdrawn, that will probably equate to say £4.00 on the balance. Will I earn that £4.00 next month now, as opposed to it dropping to say £3.00 because of me withdrawing?

That may make no sense at all but hopefully you understand! I guess what I'm trying to reassure myself on is, now I've withdrawn for May, have I totally ballsed up any chance of getting decent interest for the rest of the months, or is it just this month im being penalised?

My plan was just to withdraw what I needed (about £120) this month and then pay it back next month inclusive of the interest I would have lost.

Thanks for all your help and re-assurance!

moneymanuk

Or to put the above better, since the A&L monthly gross is 6.31% is this still what i'll be earning again from next month on the balance, regardless of my withdrawal this month?

The_Fiddler_2

As long as you don't withdraw next month you will earn 6.31% monthly gross. If you do withdraw, you will leave with nothing (to quote a well known game show )

You get full interest on months where you don't make any with drawals, and no interest if you do withdraw money in a given month.

Ian_W

Free withdrawals in July. No interest is earned on the account balance for any other month in which a withdrawal is made. The AER will be lower if you withdraw.

From A&L website.

This is an account that is probably best not used if you're likely to be withdrawing money from it with any regularity apart from in July [which is I think a fairly new innovation]. If you make occasional withdrawals a way around it is to withdraw all the balance apart from £1 and put it in an interest earning account then transfer what you haven't needed back into the account to arrive at the start of the following month. Convoluted - but at least your full balance isn't losing a full months interest.

In rough terms [steam calculator jobby!] one month w/o interest reduces the AER to 5.96%, 2 months to 5.4%. There are quite a few better instant access rates than that about.

moneymanuk

Excellent - thanks for the advice.
I'm not going to make regular withdrawals, this is the only one to date of my savings account being opened (and it was an essential car repair expense too!).

I'm glad to know that I will go back to the usual gross from next month though - I did worry about that!

Thanks.

Looter

Hi folks

I've just applied to open an Esaver with A&L - I have opted to have the interest paid back into the Esaver. Can anyone tell me if I can change where the interest is paid to, ie my linked account?

DavidAC

I think it is usual to make a few small test credits and debits to an account after first opening it, just to make sure it is all working before manking any significant deposits. I guess with this account if you did this you would get no interest in the first month.

whowants2brich

My suggestion here is that if you withdraw from the e-saver account, withdraw it all (but leave £1 in) - and pay it all into your Plus Saver account (or one of the other linked accounts which will pay more than nil interest over the next 20 days). At the very end of June or very early in July, transfer all the money back across to your e-saver account.

At least you'll get some interest on the money over the next 20 days!

PS this is what I intend to do. Plus Saver's 5.25% is certainly better than nothing, and on £1k, I make that interest to be £1.65 over 20 days. Not much work for £1.65, but anything you get is worthwhile, right?