Halifax Reg Saver - Are my calculations correct?

pjbltd

I recently signed up for the Halifax Regular Saver 10% putting in £500/month.

I wanted to find out how much interest I would accrue over the year, so calculated it in excel but got a shock at how little it was.

I found in a year I'd only make £50 interest and after tax (20%) it would be only be £40. Is this right? Have I made a mathematical error?

With such a low amount of interest why do we waste so much time hunting the best rate by only a percent or two?

Cheers

MrHelpful

If you pay in the max £500 ... quick calc of compound interest over 12 months...

£268.11 interest

Assuming you make no withdrawls and 20% tax.

Think you only calculated the interest for month 12!

YorkshireBoy

£6,000 x 10% / 12 x 6.5 x 0.8 = £260 (net of basic rate tax)

It'll be possible to make a little more by tweaking the second and subsequent SO dates.

[Deleted User]

There's a regular saver calculator here: http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#calculator

After saving £500 a month for 1 year and 0 months,
you will have £6,256.94 in savings.
meaning you've earned £256.94 interest

Incidently for the time period Jul 08 - Jun 09 my spreadsheet makes it £259.07

Monthly Reg Saver Interest = (((Monthly closing balance * Reg Saver %) / 365 days) * Number of days in month) - Tax

Jonbvn

As a quick way of determining the interest rate for a regular saver is to calculate half the interest on the total amount saved assuming a lump sum.

In this case, 6k x 10%/2 = 300 (actually 260-270).

kingmonkey

pjbltd wrote: »

With such a low amount of interest why do we waste so much time hunting the best rate by only a percent or two?

Cheers

Consider a lump sum saving of £1000. In 20 years at 5% net interest you will have £2653, if the interest was paid at 7% you will have £3869, thats a difference of £1216 for the sake of 2%. As time goes by the more impressive the difference becomes.