HALIFAX REGULAR SAVER - ripped off

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Mike.Bacon_2
Mike.Bacon_2 Posts: 2 Newbie
in Savings & investments
Like many others I took out the Halifax Regular Saver last March with a guaranteed 6% gross AER. I paid in £250 a month and have just received the interest - a measly £75.99 net! Surely that cannot be right? I'm no accountant (as may become obvious in a moment) but I reckon this is about 2.5% AER net :eek:

For a basic taxpayer 6% gross would be 4.8% net so I would expect in the region of £140 after 12 months or am I overloking something basic?
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  • Daft_Monkey
    Daft_Monkey Posts: 138 Forumite
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    Dear Mike,
    You were only going to get something in the region of £140 in interest after a year, if you had £3000 in your halifax account from day one, which was not the case (and couldn't have been the case with that particular account).
  • Bargain_Rzl
    Bargain_Rzl Posts: 6,254 Forumite
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    You haven't been ripped off.

    Your interest is paid on the amount of money which is in your account at the time, so when you start paying in you're earning interest on £250, then £500 the next month, and so on.

    If you're paying it in straight out of your salary it's the best rate you can get. If you already have the cash but are drip feeding it from another savings account where the money is earning interest until it's transferred to the Halifax, you're maximising your return.

    Martin has written an article covering exactly this account and its returns, albeit based on its current advertised interest rate. You can see it here.
    :)Operation Get in Shape :)
    MURPHY'S NO MORE PIES CLUB MEMBER #124
  • Mike.Bacon_2
    Mike.Bacon_2 Posts: 2 Newbie
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    OK I understand now. You're right I haven't been ripped off but I sure feel like I have!

    Mike :o
    Bargain_Rzl wrote:
    You haven't been ripped off.

    Your interest is paid on the amount of money which is in your account at the time, so when you start paying in you're earning interest on £250, then £500 the next month, and so on.

    If you're paying it in straight out of your salary it's the best rate you can get. If you already have the cash but are drip feeding it from another savings account where the money is earning interest until it's transferred to the Halifax, you're maximising your return.

    Martin has written an article covering exactly this account and its returns, albeit based on its current advertised interest rate. You can see it here.
  • grumbler
    grumbler Posts: 58,629 Forumite
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    Mike.Bacon wrote:
    ...I haven't been ripped off but I sure feel like I have!
    You still feel like you have been ripped off? Why? :confused:
  • Bargain_Rzl
    Bargain_Rzl Posts: 6,254 Forumite
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    I think I appreciate the reason why Mike feels ripped off. It's mainly because if you've misunderstood the T&Cs of something you're relying on, you end up expecting a certain amount of interest - you may even have budgeted that amount for something already! - and when the actual return turns out to be not much more than half what you were expecting, it comes as a bit of a blow!

    So not "ripped off" per se, but short on cash compared with what Mike was expecting.

    This is not intended to sound patronising Mike, but can I suggest you double-check that you fully understand the terms of your future investments before signing on the dotted line?

    Mike, in the meantime, the fact remains that for somebody with £250 a month to invest, you have been getting (one of?) the highest-paying non-ISA cash savings rate(s) on the market.
    :)Operation Get in Shape :)
    MURPHY'S NO MORE PIES CLUB MEMBER #124
  • ffacoffipawb
    ffacoffipawb Posts: 3,593 Forumite
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    Mike.Bacon wrote:
    Like many others I took out the Halifax Regular Saver last March with a guaranteed 6% gross AER. I paid in £250 a month and have just received the interest - a measly £75.99 net! Surely that cannot be right? I'm no accountant (as may become obvious in a moment) but I reckon this is about 2.5% AER net :eek:

    For a basic taxpayer 6% gross would be 4.8% net so I would expect in the region of £140 after 12 months or am I overloking something basic?

    Seems about right to me ........

    Month
    Payment
    Start Mth
    Interest
    End Month
    Balance
    Balance

    1
    250.00
    250.00
    0.98
    250.98
    2
    250.00
    500.98
    1.96
    502.94
    3
    250.00
    752.94
    2.95
    755.89
    4
    250.00
    1,005.89
    3.94
    1,009.82
    5
    250.00
    1,259.82
    4.93
    1,264.76
    6
    250.00
    1,514.76
    5.93
    1,520.69
    7
    250.00
    1,770.69
    6.93
    1,777.62
    8
    250.00
    2,027.62
    7.94
    2,035.56
    9
    250.00
    2,285.56
    8.95
    2,294.50
    10
    250.00
    2,544.50
    9.96
    2,554.46
    11
    250.00
    2,804.46
    10.98
    2,815.44
    12
    250.00
    3,065.44
    12.00
    3,077.44

    (Apologies for the "-", couldn't format the table!)

    Total interest on £3,000 invested is £77.44 based on a AER of 4.80% net.

    Based on every month being 1/12th of a year and all £250 payments paid at the very start of the month> This is not really the case, hence the small difference from your figure of £75.99.
  • Robert_Sterling_3
    Robert_Sterling_3 Posts: 7,112 Forumite
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    Just when the account starts to be of more interest it gets closed down.
    Terms & Conditions ... I should CoCo.
    ...............................I have put my clock back....... Kcolc ym
  • lipidicman
    lipidicman Posts: 2,598 Forumite
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    Mike, I am sure a lot of people made the same mistake. Halifax staff said a lot of people also turned up with £3k to deposit on opening the account!

    You have learned a valuable lesson about reading the T&Cs and being sceptical about headline promotions without incurring any charges - so be thankful. Fail to read the T&Cs on a credit card and it could have cost you big time!

    As it is you have one of the best paying accounts around and factor in the interest the money earned before you transferred to the RegSaver and you will have done very well.
  • ED
    ED Posts: 617 Forumite
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    Robert_Sterling - Closed down? Halifax's 7% gross Regular Saver is still offered here :

    http://www.halifax.co.uk/savings/regularsaver.shtml

    To the poster before Robert, well done for persevering with making a table! It's the sort of thing Times 'Money' journalist Grainne Gilmore needs to see. Yet again, readers were presented (March 19) with failure to comprehend £'s earn money elsewhere before dripping month-by-month into regular saver accounts :

    "Pay £250 a month into HSBC's regular savings account for one year and you will receive £120 in interest. But a lump sum of £3,000 will attract a return of £160.50 in Alliance & Leicester's instant access account paying 5.35 per cent interest."
  • grumbler
    grumbler Posts: 58,629 Forumite
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    ffacoffipawb wrote:
    Month
    Payment
    Start Mth
    Interest
    End Month
    Balance
    Balance

    1
    250.00
    250.00
    0.98
    250.98
    2
    250.00
    500.98
    1.96
    502.94
    .........
    12
    250.00
    3,065.44
    12.00
    3,077.44
    A little less accurate, but very simple calculation is:

    £1500x6%x0.8=£72

    £1500 is the average balance during a year.
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