Please help before i complain to the bank

lavamoney

Hi, i wonder if some people can help me because im sure i've been done over here.

I opened up a regular saver (Yorkshire BS) a year ago and i'm almost sure the rate was 9% (which included a bonus if you didnt withdraw, which i haven't) They are saying it never was 9% and the highest it got was 7.1% and it was variable.

Anyway i have put £500 away for 12 months so investment of £6000. Even taking the fact the rates i'm sure i should have got were not correct it has been between 6.3 and 7.1 according to the YBS dude. And so the interest i have earned after tax according to them is £154.50. I just cant see that as being right as its about 2.5%.

Anyone help me work it out at all?

Pound

Did you put £500 away or £6000?
How often is interest paid? The £154.50 might be what you've earned after 6 months or the end of the tax year.

It would be very unusual for a bank to offer as much as 9%.

Baldur

Pound wrote: »

Did you put £500 away or £6000?

The OP reads to me as £500 (per month) for 12 months, i.e. £6,000.

Pound

Oh, that makes more sense then. If the OP is only putting £500/month in then they're not going to get as much if they're put £6,000 in in one lump sum. They'd only earn interest on £500 in month 1, £1000 + last month's interest in month 2, etc.

Here's a spreadsheet I knocked up, assuming interest is 6%.

[B]Balance    Interest[/B]
500        2.5
1002.5     5.01
1507.51    7.54
2015.05    10.08
2525.13    12.63
3037.75    15.19
3552.94    17.76
4070.7     20.35
4591.06    22.96
5114.01    25.57
5639.58    28.2
6167.78    30.84
[B]           198.62
[/B]

Bottom figure would be the total gross interest earned in one year. So minus tax, would be about £150.

interest_Ted

Pound - surely you only get interest on interest once it has been added to the account. This one pays interest annually.

Lavamoney - did you read Martins explanation of the regular saver misunderstanding ?
see http://www.moneysavingexpert.com/savings/best-regular-savings-accounts
and scroll down to "don't believe the bad press".
Also the amount of interest will depend on when you deposited the £500. For example if you want to maximise the interest rate you open the account towards the end of the month and make your monthly deposits as early as possible each month.

Hopefully this will help you understand how you got the amount of interest stated. However, if you don't understand how they calculated the interest as stated, I am sure someone at the YBS will be happy to explain it to you in detail. I would very much doubt that they have made any errors.

Oh, and the 'dude' is right - it has never been 9%.

Ted

Pendle_Gazza

lavamoney wrote: »

Anyway i have put £500 away for 12 months so investment of £6000. Even taking the fact the rates i'm sure i should have got were not correct it has been between 6.3 and 7.1 according to the YBS dude. And so the interest i have earned after tax according to them is £154.50. I just cant see that as being right as its about 2.5%.

Anyone help me work it out at all?

You're making the common mistake of thinking the whole £6K gets the whole interest, thats all. In it's easiest form, if you've deposited at the same time each month for the full 12 months, you need to halve your final amount (i.e. effectively the average you've had in the account over the course of the year) - in this case £3K - and work the interest out on that.

So it works out that you've received just over 5% after tax for the year, which sounds about right. You probably had an interest rate of around 6.5%.

[Deleted User]

I make it out to be the following assuming 6% AER and using the following forumula in the Interest column:

= ( ( Balance at start of the month * AER%) / 365) * Number of days in the month

[FONT=monospace]Month    # days Balance    Interest Total Savings
[/FONT]
Jun-08    30    500.00     2.47     501.97 
Jul-08    31    1000.00    5.10     1006.05
Aug-08    31    1500.00    7.64     1512.16
Sep-08    30    2000.00    9.86     2020.05  
Oct-08    31    2500.00    12.74    2530.25    
Nov-08    30    3000.00    14.79    3042.08   
Dec-08    31    3500.00    17.84    3556.35    
Jan-09    31    4000.00    20.38    4072.66    
Feb-09    28    4500.00    20.71    4589.23   
Mar-09    31    5000.00    25.48    5109.61    
Apr-09    30    5500.00    27.12    5631.31   
May-09    31    6000.00    30.58    6155.77   
                 
                 Total:    194.71        

The savings calculator (http://www.moneysavingexpert.com/savings/savings-accounts-best-interest#savingscalc) is 89p less than my figure, pretty accurate!

dwsjarcmcd

The regular saver was NEVER anywhere near 9%. When it launched it paid either 7 or 7.5% including bonus.

lindos90

Just a note, but Halifax's new RS is now 10%, banks are starting to offer higher interest for savings like this, they are getting more despirate for our cash!

RayWolfe

It Started at 6.5%, went to a high of 7.1%, is now 6.35%. I think the OP was having a dream when he thought it was 9.0%. Why don't people keep records?

lavamoney

Guys thanks for all the replies.

I should have searched for calculators before making a post, i just came off the phone from the bank and was quite perturbed so wrote on here.

I realise interest is calculated on each monthly balance and it was paid at the end of a year and i think everything is correct so my bad. The account had gone to 7.something at one point and so to get £154 at the end of the year after tax it must have dropped a fair bit i guess.

Cheers