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    • redandwhitestripes
    • By redandwhitestripes 12th May 18, 11:35 AM
    • 39Posts
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    redandwhitestripes
    Are regular savings accounts worth it ?
    • #1
    • 12th May 18, 11:35 AM
    Are regular savings accounts worth it ? 12th May 18 at 11:35 AM
    I wasn't too bad at maths in my younger days although things are catching up on me a bit but I was wondering whether those regular savings accounts are actually worth using.

    I may be missing the point a little bit , but I did some back of a beermat sums and worked out that the Chelsea 2% at up to 500 a month equates to around 1% over the 2 years.
    I have a charter Savings easy access account at 1.31% , so may as well use that.

    The best ones I've found are the First Direct and and Nationwide ones.
    The TSB, Santander ones don't really offer much, and I only keep the Lloyds one because I like getting a free Empire magazine each month!.

    Just wondered your thoughts.
Page 1
    • anamenottaken
    • By anamenottaken 12th May 18, 11:45 AM
    • 4,146 Posts
    • 3,628 Thanks
    anamenottaken
    • #2
    • 12th May 18, 11:45 AM
    • #2
    • 12th May 18, 11:45 AM
    If a regular saver pays 2% pa (aer) then it pays 2% pa on the amount in the account at the time. You drip feed the capital and your actual of interest increases as the amount of capital increases.

    Your back of the fag packet/beermat calculation presumably assumes something like you should get interest for the whole year on the amount it only reaches at the end of a contribution year.
    • ValiantSon
    • By ValiantSon 12th May 18, 12:07 PM
    • 2,167 Posts
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    ValiantSon
    • #3
    • 12th May 18, 12:07 PM
    • #3
    • 12th May 18, 12:07 PM
    I wasn't too bad at maths in my younger days although things are catching up on me a bit but I was wondering whether those regular savings accounts are actually worth using.
    Originally posted by redandwhitestripes
    Asuming that you have cash that you are able to lock away for a relatively short period of time then yes, they are, as they pay a higher rate of interest than many other accounts.

    I may be missing the point a little bit , but I did some back of a beermat sums and worked out that the Chelsea 2% at up to 500 a month equates to around 1% over the 2 years.
    Originally posted by redandwhitestripes
    No it doesn't, it equates to 2%. The rate of interest earned is 2% and this is paid on all the money that is in the account at any given time. What often confuses people is the perception that because an account offers a headline rate and they can see the maximum that can be deposited, they believe they should earn 2% on that total, but that total is not in the account for the full term. They do earn 2% on all of the money, but only when it is actually in the account.

    I have a charter Savings easy access account at 1.31% , so may as well use that.
    Originally posted by redandwhitestripes
    Not really, because you are only earning 1.31% on that money. In one year of depositing 500 per month into the Chelsea regular saver you would earn 64.80 in interest. Over the same period, depositing the same amount into your easy access account, you would only earn 42.49 in interest.

    If you have a lump sum of money that is equivalent to one year at 500 p/m (6,000) then you would actually be best to use both accounts, and move 500 every month across to your regular saver. This would result in you earning 101 in interest.

    The best ones I've found are the First Direct and and Nationwide ones.
    Originally posted by redandwhitestripes
    HSBC & M&S also have regular savers offering 5% on 250 per month, and Santander has one offering 5% on 200 per month. Club Lloyds offers 3% on 400 per month.

    Of those not linked to a current account, Leeds Building Society and Virgin Money offer accounts that beat your example from Chelsea Building Society, with 2.55% and 2.25%, respectively, on 250 per month.

    The TSB, Santander ones don't really offer much,
    Originally posted by redandwhitestripes
    I'm not sure how you worked that out! Firstly, the TSB and Santander rates are completely different, with Santander being 5% on 200 p/m and TSB being 2% on 250 p/m, but ignoring your strange decision to equate them, you would earn 64.52 in Santander and 32.40 in TSB. Compare these figures to your 1.31% easy access account and you will see that you earn 22.03 more in Santander. While you would earn less in the TSB account, if you have a lump sum then even using that would increase your return over simply using the easy access.

    and I only keep the Lloyds one because I like getting a free Empire magazine each month!.
    Originally posted by redandwhitestripes
    Then you are missing out on a potential extra 77.65 in interest per year!

    Just wondered your thoughts.
    Originally posted by redandwhitestripes
    I think the beer mat you used must have been soggy, so that the ink ran and you couldn't make the numbers out clearly.
    • ColdIron
    • By ColdIron 12th May 18, 12:18 PM
    • 4,330 Posts
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    ColdIron
    • #4
    • 12th May 18, 12:18 PM
    • #4
    • 12th May 18, 12:18 PM
    According to my details for this years self assessment I earned 733.10 from regular savers last year so I'd say it was worth it. It all adds up
    • fabsaver
    • By fabsaver 12th May 18, 12:25 PM
    • 872 Posts
    • 1,662 Thanks
    fabsaver
    • #5
    • 12th May 18, 12:25 PM
    • #5
    • 12th May 18, 12:25 PM
    Of course they are. Where else can you earn 5% AER with a FSCS guarantee?

    If you're still unsure it's all explained here https://www.moneysavingexpert.com/savings/best-regular-savings-accounts
    • Fingerbobs
    • By Fingerbobs 12th May 18, 12:33 PM
    • 436 Posts
    • 112 Thanks
    Fingerbobs
    • #6
    • 12th May 18, 12:33 PM
    • #6
    • 12th May 18, 12:33 PM
    Yes, definitely worth it. I've currently got 9 of them running in parallel with different banks and building societies.

    My aim was to arrange to have one maturing every month, but some of them require you to jump through too many hoops to actually get them (e.g. the M&S one requires you to use the CASS to switch to their current account, which isn't something I want to do), so I can't really achieve one a month.
    • ValiantSon
    • By ValiantSon 12th May 18, 12:58 PM
    • 2,167 Posts
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    ValiantSon
    • #7
    • 12th May 18, 12:58 PM
    • #7
    • 12th May 18, 12:58 PM
    Yes, definitely worth it. I've currently got 9 of them running in parallel with different banks and building societies.

    My aim was to arrange to have one maturing every month, but some of them require you to jump through too many hoops to actually get them (e.g. the M&S one requires you to use the CASS to switch to their current account, which isn't something I want to do), so I can't really achieve one a month.
    Originally posted by Fingerbobs
    Why not open a second account with an existing bank and then switch that to M&S? It is very straightforward, and perfectly acceptable.
    • Fingerbobs
    • By Fingerbobs 12th May 18, 2:03 PM
    • 436 Posts
    • 112 Thanks
    Fingerbobs
    • #8
    • 12th May 18, 2:03 PM
    • #8
    • 12th May 18, 2:03 PM
    Why not open a second account with an existing bank and then switch that to M&S? It is very straightforward, and perfectly acceptable.
    Originally posted by ValiantSon
    Definitely an option to be considered, but not something I've personally ever done before.

    NatWest's Savings Builder account also looks potentially interesting. It only pays 1.5% on a balance of 5000, but you can put the whole 5k into it and earn the 1.5% on 5k from day 1, provided you bung another 50 into it each month.
    • kidmugsy
    • By kidmugsy 12th May 18, 2:07 PM
    • 11,039 Posts
    • 7,586 Thanks
    kidmugsy
    • #9
    • 12th May 18, 2:07 PM
    • #9
    • 12th May 18, 2:07 PM
    The nation certainly has ample reserves of people puzzled by the idea that you don't get paid interest on money you've not paid into the account yet.
    Free the dunston one next time too.
    • ValiantSon
    • By ValiantSon 12th May 18, 2:30 PM
    • 2,167 Posts
    • 2,041 Thanks
    ValiantSon
    Definitely an option to be considered, but not something I've personally ever done before.

    NatWest's Savings Builder account also looks potentially interesting. It only pays 1.5% on a balance of 5000, but you can put the whole 5k into it and earn the 1.5% on 5k from day 1, provided you bung another 50 into it each month.
    Originally posted by Fingerbobs
    I'd suggest only worth bothering with once you've exhausted most of the regular saver and current account options.

    To make the best use of it you'd need to withdraw the 50 as well, otherwise you will have an increasingly large sum sitting in it only earning 1%.
    • Joe_Bloggs
    • By Joe_Bloggs 12th May 18, 3:00 PM
    • 4,448 Posts
    • 1,564 Thanks
    Joe_Bloggs
    I am enthusiastic about acquiring lucrative regular savers. I have jumped through hoops , acquiring access to the best deals.

    There does becomes a time when they mature and that you have bucket loads of cash to find a home for.

    My regular savers mature just before and after Christmas. Rather than buy everyone presents I renew my season travel pass before it goes up in price. In fact I do this by buying on a new 0% on purchase credit card and paying off an old 0% purchase credit card that I used to buy the expiring pass.*

    I do this with interest earned from regular savers and the some of the original capital from the regular saver.

    The 0% credit card also generates a direct debit required for holding a current account that qualifies for a regular saver. So a win-win situation.

    I would not use these cards unless I had the buffer of regular savings that exceeded the debt on these cards .

    Regular savings can be a source of emergency funds. I experience a penalty for withdrawal resulting in a loss of interest/opportunity to replace withdrawn funds. Different penalties may apply, so research terms and conditions as they apply.



    The problem with mainstream savings is the rate of interest that has been forced too low for too long.
    J_B.

    * You may be able to get an employer loan to buy a season ticket but this would be treated by the HMRC as a benefit in kind at their interest rate of 2.5%

    There have been rumors of extending the cycle to work salary sacrifice benefit to include helicopters.
    Last edited by Joe_Bloggs; 12-05-2018 at 3:04 PM. Reason: Always copy to a local buffer before submitting to this site
    • veryintrigued
    • By veryintrigued 12th May 18, 3:06 PM
    • 2,415 Posts
    • 1,853 Thanks
    veryintrigued
    According to my details for this years self assessment I earned 733.10 from regular savers last year so I'd say it was worth it. It all adds up
    Originally posted by ColdIron
    Yeah but I reality you should have earned twice that much if the Regular Savers actually paid what they advertised they do (said and thought far too many posters on here!!).
    • ColdIron
    • By ColdIron 12th May 18, 3:26 PM
    • 4,330 Posts
    • 5,492 Thanks
    ColdIron
    Not that old chestnut again

    They pay exactly what they advertise and don't forget the money that is not deposited is earning interest elsewhere

    If you find a savings account that pays interest on money not yet deposited let us know, I'm sure they'll be wildly popular
    • shortcrust
    • By shortcrust 12th May 18, 3:27 PM
    • 2,018 Posts
    • 3,008 Thanks
    shortcrust
    Do you have somewhere else to put your money that pays a higher rate? If so then they're not worth it. If not then they are worth it.
    • ValiantSon
    • By ValiantSon 12th May 18, 3:39 PM
    • 2,167 Posts
    • 2,041 Thanks
    ValiantSon
    Not that old chestnut again

    They pay exactly what they advertise and don't forget the money that is not deposited is earning interest elsewhere

    If you find a savings account that pays interest on money not yet deposited let us know, I'm sure they'll be wildly popular
    Originally posted by ColdIron
    I think that veryintrigued was making a joke.
    • ColdIron
    • By ColdIron 12th May 18, 3:45 PM
    • 4,330 Posts
    • 5,492 Thanks
    ColdIron
    Apologies to veryintrigued if so

    Still, it's only a matter of time
    • ValiantSon
    • By ValiantSon 12th May 18, 3:46 PM
    • 2,167 Posts
    • 2,041 Thanks
    ValiantSon
    Apologies to veryintrigued if so

    Still, it's only a matter of time
    Originally posted by ColdIron
    I think we hit that moment with the original post!
    • redandwhitestripes
    • By redandwhitestripes 12th May 18, 5:45 PM
    • 39 Posts
    • 21 Thanks
    redandwhitestripes
    The reason I asked the question was because I got different answers using different Regular savings calculators.

    Here, thisismoney , moneyfacts - they all give different returns.
    • Joe_Bloggs
    • By Joe_Bloggs 12th May 18, 6:01 PM
    • 4,448 Posts
    • 1,564 Thanks
    Joe_Bloggs
    @redandwhitestripes
    Compare your calculator experiences with this one:-


    https://www.moneysavingexpert.com/savings/best-regular-savings-accounts#calculator


    It would benefit everyone if you find an error that can be demonstrated and then later rectified.

    J_B.
    • ValiantSon
    • By ValiantSon 12th May 18, 6:16 PM
    • 2,167 Posts
    • 2,041 Thanks
    ValiantSon
    The reason I asked the question was because I got different answers using different Regular savings calculators.

    Here, thisismoney , moneyfacts - they all give different returns.
    Originally posted by redandwhitestripes
    Put the following formula into Excel and it will give you your total balance at the end:

    monthly deposit*((1+interest rate)^(Number of months/12)-1)/1-(1+interest rate)^(-1/12))
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