£12,000 to save

riversider1982

Hi, this is my first post on this forum, so bear with me. I have recently had a Guarenteed reserve from Halifax mature of around £12,000. I have no debts to pay off and have used up my ISA allowance for the year. I was thinking of putting this money in either an Icesave or Kaupthing savings account and drip feeding this into the Halifax 10% regular saver. I already have accounts with halifax and i believe that if you have more than £5,000 you can get 12%, is this true?

Would this be a good idea??? Any feedback would be appreciated.

isofa

I can't advise re the drip feeding, but Icesave and KE are both good accounts. If you don't need access for a year, you could lock it away in a 7% fixed rate account "Bond" available from both these companies or others too.

I imaging the regular saver accounts have a limit on the balance and what you can deposit per month, making it less attractive.

Essenchill

I was wondering the same as riversider - have some money sitting in Kaupthing and wondering if drip feeding it into the Halifax regular saver would acually offer me a better return - I can never work these things out. If I'm getting a 6.5%(ish) rate with Kaupthing but Halifax pay 10% but I can only drip feed in £500 a month maximum, will it just not work out better over the year as Kaupthing depletes and Halifax slowly rises?

LongTermLurker

See http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#savingscalc
(select the drip feed tab)

Putting in £12000 into a 6.5% instant access account and drip feeding £500pm into Halifax RS @ 10 % gives the following output (baesd on basic rate taxpayer)

After drip-feeding the cash for 12 months...

TOTAL INTEREST EARNED: £713
£456 from the normal savings & £257 in the regular saver.

If you'd kept the money only in the normal savings account you'd have earned £624 in interest.

You'll get slight variance due to the time to transfer the money; because KE can't drip feed money out, you wo0uld have to set a Halifax current account as the Linked Account and manually push £500pm from KE to that - once there, you would then have to push it across to the RS account using a standing order or manual BACS payment. Because this bit is internal, it should be instant. However, all that makes it a bit messy and time consuming, but you'd be a bit under £90 better off for doing it.

Also remember that the KE rate may go up or down over the year, but the RS rate is fixed at 10%

Jonbvn

Essenchill wrote: »

....will it just not work out better over the year as Kaupthing depletes and Halifax slowly rises?

This is the "drip feeding" approach which MSE recommends in their savings article, and will give you a marginally better return than just keeping the money in the instant access account.

The important thing is that the KE a/c pays the interest monthly (and hence compounds) whereas the HFX Regular Saver pays the interest only at the end of the term (i.e. no compounding).

whu

riversider welcome to the site- yes if you have £5k in a halifax accn you will get 12%- it seems to me that you would probably be better putting it all in a fixed account for a year or say the KE savings account as you will get the interest on the whole amount from the start rather than say 12% on £5000 at month ten assuming you put in the max of £500 a month and you can withdraw the money at any time if that is important to you - i am sure someone will be able to give a definitive answer on the calculations

Essenchill

LongTermLurker wrote: »

Also remember that the KE rate may go up or down over the year, but the RS rate is fixed at 10%

I'd be astounded if the rate went up anywhere near 10% but it could very easily slide down a bit which would mean missing out...

The whole setting up a third account (Halifax current account) would make the whole thing unworkable for me and too messy as you rightly say. Thanks so much for your help.

LongTermLurker

Essenchill wrote: »

I'd be astounded if the rate went up anywhere near 10% but it could very easily slide down a bit which would mean missing out...
.

Sorry, I wasn't suggesting it might go up to compete with the regular saving, so much as just pointing out that the end figure could vary.

Essenchill

Jonbvn wrote: »

The important thing is that the KE a/c pays the interest monthly (and hence compounds) whereas the HFX Regular Saver pays the interest only at the end of the term (i.e. no compounding).

This is an important point I'd missed (though to be completely honest I've never really understood if it's better to get interest paid annually or monthly, and the way you explained it there, with the addition of the word 'compounding' has made that clearer for me, and hopefully I will now remember that) and thanks so much for pointing it out!!

marginally - thats the answer I needed - it would be a lot of hastle for a marginal gain. My problem solved, thanks again.

Essenchill

LongTermLurker wrote: »

Sorry, I wasn't suggesting it might go up to compete with the regular saving, so much as just pointing out that the end figure could vary.

I know you weren't! Just me the optimist :rolleyes:

jules73_2

You can get 12% on the regular saver if you have £5000 in one of the nominated accounts.

Go for the guaranteed saver reward which pays 6.25% AER