Savings account to pay regular bills

ValiantSon wrote: »

I think the OP was talking about withdrawals for annual costs, like car insurance. Using a regular saver could, therefore, be useful.

if he's going to use it to regularly save and close it end of term with the interest added, perhaps, but not as an easy access account. The balance will be running low most of the time so the interest you'd get would be negligible. Regular Savers work best if you are in a position to deposit the maximum for the whole term.

aj23 wrote: »

But you can usually only make one withdrawal a year on Regular Savers penalty free, so you couldn't use that to pay monthly bills.

The OP was asking specifically about paying annual bills, so a correctly timed Regular saver would be perfect.
Many regular savers are also easy access, so OK for unexpected bills.
I agree they'd be no use for monthly bills, but if they're being paid out of monthly income, no saver account is much use.

Eco_Miser wrote: »

The OP was asking specifically about paying annual bills, so a correctly timed Regular saver would be perfect.
Many regular savers are also easy access, so OK for unexpected bills.
I agree they'd be no use for monthly bills, but if they're being paid out of monthly income, no saver account is much use.

Insurance and car tax, yes. But boiler problems don't necessarily happen just once a year.

I think all, if not most, Regular Savers are easy access, some just put a restriction on the frequency of withdrawal, and it's usually once a year or bonus period etc. Your money isn't locked away from day one until the term ends.

If you're timing it to coincide with when the bill needs paying, you don't need to wait until 12 months before to open it. You can open it anytime, and then it just matures at the end of the term. It will still be there (in real easy access) for when you need it.

ValiantSon wrote: »

No, even if you draw the money before the 12 month term it can still, potentially, be a better option than an easy access account. To give an example, saving the full £250 p/m in Nationwide's regular saver, and then withdrawing the money at (for sake of argument) the end of the eighth month, would give you £37.02 interest. Compare this to putting the money in an easy access savings account at 1.35% (currently best), which would pay £10.09 in the same period. Even if you had the full £3000 in the easy access saver from the start, you would still only get £27 after eight months. The regular saver wins.



I've already said that Nationwide and Santander allow you to make withdrawals at any time, without penalty or restriction. HSBC, First Direct and M&S don't allow any withdrawals until the account matures. If you close the account early then they transfer the money to a normal savings account and treat it as if it has always been in that account, paying just 0.05% in HSBC and First Direct, and 0.1% in M&S.

Yeah, I didn't say it isn't potentially a better option, even if you withdraw before 12 months, if it lets you. You've highlighted many who don't allow withdrawal. That's why I said that that an easy access is better for if you need frequent access. Using a Regular Saver as an easy access account means you usually can't replace that months deposit, or the balance, subject to loss of interest, and perhaps penalties, and the term is usually 12 months anyway. That's why I said open one, max it out for 12 months, then it concerts to easy access at the end, so you have the RS interest and easy access after 12 months.

Yeah Nationwide and Santander, that's essentially it. So unless you have the current account with either you can't open them anyway.

We're are basically saying the same and agreeing, so I'm not sure why you're being combative.

ValiantSon wrote: »

I'm not being combative, I have pointed out some flaws in what you said as, if someone acted on your statements, they might make a less good choice. The principle purpose of the forum is to share information and insight, so as to aid others in making a decision. Sometimes that means that you will be contradicted.

You actually said that if a regular saver wasn't, "maxed out," then, "there [was] no point." This was factually incorrect. I posted to correct that by showing how a regular saver, used in the way described - withdrawing money before maturity, could lead to a better result than an easy access account. We aren't, "basically saying the same."

It is not beyond the capability of someone of average intelligence to open a qualifying current account with either Santander, or Nationwide (or even both) to get access to their 5% regular savers. Your objection, therefore, makes no sense. These are not accounts only for those fortunate enough to happen to already hold current accounts with these two companies. Indeed, they are actually intended to attract new customers (as well as help to retain existing ones).

If they want to use a product for which it isn't designed, that's not my problem or fault. I use Regular Savers to save regularly, not to use to pay bills.Even if I wanted to, I couldn't because they both only allow one penalty free withdrawal per year.

Telling someone to use a Regular Saver as an Easy Access account, when you've already provided proof that a tiny percentage of Regular Savers allow unlimited withdrawals, isn't exactly a good choice either. Even if you do choose Nationwide or Santander, provided you have the Current Account that it links to (which both pay interest, by the way) and provided you want to bank with either of those (which you didn't factor in), if you use the balance you've saved 8 months in, you won't get any interest at the end of the 12 months because you only get interest on your balance. That is a flaw, and it's not an idea that I put forward.

If you don't max out a Regular Saver, there isn't much point, no. It is fact. Some will pay out £35 on a max deposit. Don't save full amount and you might get a fiver or tenner. Wow, big woop! You can't deny that maxing out a Regular Saver to get the max interest isn't the best scenario (if you can, otherwise it's a long wait for £5). I haven't objected to someone using a Regular Saver for what you're saying, I'm saying I don't think it's necessarily the best option because of the restriction most place on them. The whole point is to save regularly so you build up a pot which you can either leave or put toward something at the end of the term, presumably someone of average intelligence can deduce that from the name of the product :beer: