Confused about best interest

Shevek

OK, I've been reading through the Savings Accounts and Regular Savings Accounts articles which state that Regular are better.

So, if I fill up the top 3 listed Regular accounts each month to the max, £500 in Halifax, £250 each in Abbey and Barclays, that will be a total of £12,000 saved over the year.

Using the calculator on that page I get the following (no tax to pay):

Halifax @ 10% on £500 per month = £320.27 interest
Barclays @ 7.75% on £250 per month = £124.50 interest
Abbey @ 7.25% on £250 per month = £116.55 interest

So a total of £561.32 interest for the whole year

And yet if we save the whole £12,000 in the best savings account (6.5%) the calculator on that page gives the following shows £780 of interest after a year.

So, surely it's better to just put the whole lump sum in the 6.5% account, or am I missing something here...?

Baldur

The regular accounts need to be 'drip-fed' from an ordinary savings account in order to maximise the interest potential. You will find examples if you try a search on the forums.

debbie42

Shevek wrote: »

or am I missing something here...?

You're missing the fact that the money you would have in the savings account is there all year. The regular savings are there only around half that time. They would be somewhere else earning interest before you put them into the RS, for comparison's sake though?

BruceyBonus

If you pay into the regular savers every month and then keep the rest of the £12000 in the 6.5% account, you will actually earn approx £925 interest. That is because the rest of the money will earn interest in your 6.5 %account.

See this: http://spreadsheets.google.com/pub?key=plkBYJn_8Mlbw8COwJfcRZA

Shevek

Gah, I'd just calculated that myself too! That'll teach me to do my thinking before posting in future :embarasse

Sorry to have troubled you and thanks for the replies.