Regular Savings Accounts Article Discussion

schiff

The peak of the VM RSs is about 15 accounts and we are now at the stage where they are starting to mature, which will make it easier to manage the new issues. Having 15 maxed out was a bit of a strain on resources over that first year but it gets easier from now on.

In effect they are like savings accounts with the facility to withdraw and/or reduce payments. I've recently sacrificed one of my Bank of Scotland accounts to facilitate operations for the last couple of months but in addition switched the Bank of Scotland account to the Yorkshire Bank for its irresistible reward!

Of course the higher payers have taken precedence when available.

schiff

The first store version matures on December 1st. I'm due to go in on Monday to open the new issue and hope to find out how the maturity will work, in particular whether I can withdraw in cash, which is my preferred option if available.

mhoc

Does anyone know where this £250 maximum deposit comes from now which seems to be the industry standard (aside from FDs £300 and a very few that allow £500 a month deposits)

Not very many years ago when I first started Nationwide had a monthly saver that allowed £1000 a month deposits and I also had a Cheshire Building Society monthly saver with £500 a month maximum allowed. In the early days that was about all I needed, 2 standing orders and only the Cheshire maturity date, Nationwide allowed withdrawals and deposits as and when and it was open ended.

Now though to save this same £1500 I need to have 6 regular savers - at least with Virgin all the regular savers are in one place, 6 standing orders, checking that they have all gone through each month and making a note on the calendar of the maturity dates - a bit more work but nothing strenuous once everything is set up and running.

I think the low £250 a month maximum makes life difficult for people who are saving for big projects - kitchens, bathrooms, deposits, new cars

colsten

mhoc wrote: »

I think the low £250 a month maximum makes life difficult for people who are saving for big projects - kitchens, bathrooms, deposits, new cars

If people indeed have more than £250 spare a month, they can look for accounts that allow deposits of more than £250 a month - plenty of which are still about, both, in terms of Regular Savers and other interest-paying accounts. The other alternative is to split the savings across two or more accounts.

colsten

welshmoneylover wrote: »

Its for existing members only but still worth a look.

Well, I am an existing member and I had a look. It wasn't worth it, as their definition of "existing member" is a lot more onerous than mine.

RG2015

RG2015 wrote: »

I can understand the popularity of the 5% regular saver at Santander, First Direct, Nationwide and M&S. However I cannot see the great attraction of a 2.25% account for a net additional income of £20 over 14 months (£15 over 12 months)

Thanks for all of your replies and I do now see some of the attraction. I am now going away to crunch some numbers to see how much extra I could earn by opening several accounts as they become available.

EachPenny

RG2015 wrote: »

The Virgin Money 2.25% Regular Saver earns a maximum of £49 over the maximum period of 14 months. The same investment at 1.35% in the best easy access account earns £29.

Just to clarify the figures, If you've used a 'pot' of £3250 to drip feed into the RS account then the standard savings account would also generate an additional £22 bringing the total to £71. The same money left in the standard savings account for the whole 14 months would earn £51.

I can see how you've arrived at your figures, and the net gain of about £20 is correct, but it is important to consider the RS and standard savings account together as a unit to appreciate the benefit of multiple accounts.

People looking at RS accounts tend to ignore the value of the savings they have which are not yet in the RS account. The model you've presented leaves the money into the best instant access account. But if you opened a second 2.25% RS as soon as possible then you will get the whole balance earning the higher rate faster than in the approach you've assumed meaning the total gain is greater. With Virgin Money you could (if you have a branch nearby) open two accounts at the same time, or based on past performance a new issue will become available after about two months.

The other factor is that until quite recently a good instant access account was only earning about 1.1%. At that rate each Virgin RS was worth an extra £25 over the 14 months.

RG2015 wrote: »

Perhaps if someone already has all of the 5% savers and opens several VM savers. Five for example takes the additional earning up to £98 which is still only equivalent to £73 over 12 months.

Is it the ability to hold several VM regular savers that is the real attraction of the account?

I was a little late to the party and only have 13 accounts. Looking at things from a slightly different perspective, if one of the big banks launched a new regular saver which allowed a maximum of £3250 per month at 2.25% it would be headline news on MSE, people would get trampled in the rush to open one :cool:

About a year ago the rates on most of my instant access accounts were reducing to below 1%, in some cases as low as 0.75%. My strategy since then has been to shift all of that money into RS accounts as quickly as possible - so anything over 1.5% looked attractive, and the more the merrier.

I'm now in a situation where I'm looking at some of the 2% current accounts and considering whether they still represent good value. With Tesco pulling the plug on their DD machine the BoS Vantage accounts will have an effective rate (for me) of 1.52%. So rather than going mad trying to find 6 alternative DD's I'm just going to let those accounts drain into Virgin RS accounts at 2.25% - 5 months and it will be done.

So for me that has been the great attraction of the Virgin RS accounts. Like TheShape says, even if I didn't have the money or need to open new issues I would still have done it using minimal contributions, since the sheer quantity of accounts has allowed a new strategy to develop.

I'm very grateful to MSE forum members for helping me discover Virgin Money

schiff

EachPenny wrote: »

With Tesco pulling the plug on their DD machine the BoS Vantage accounts will have an effective rate (for me) of 1.52%. So rather than going mad trying to find 6 alternative DD's I'm just going to let those accounts drain into Virgin RS accounts at 2.25% - 5 months and it will be done.

Would you expand on that for me please, in particular the reference to 1.52%.

EachPenny

schiff wrote: »

The first store version matures on December 1st. I'm due to go in on Monday to open the new issue and hope to find out how the maturity will work, in particular whether I can withdraw in cash, which is my preferred option if available.

Not all stores handle cash, so worth checking that before you travel if you don't already know

There is information on the VM website about the maturity process - another form to be filled in and returned in the post. I think I'm going to set up an instant access online savings account to receive maturing funds and then hopefully FP them elsewhere. That should work for both online and store accounts.

RG2015

EachPenny wrote: »

I was a little late to the party and only have 13 accounts. Looking at things from a slightly different perspective, if one of the big banks launched a new regular saver which allowed a maximum of £3250 per month at 2.25% it would be headline news on MSE, people would get trampled in the rush to open one :cool:

I'm very grateful to MSE forum members for helping me discover Virgin Money

Thank you for your highly informative post!

Just need a couple to years to catch up with you then with online accounts. If easy access rates continue to rise though will VM raise their 2.25% rate?