Savings Interest & Confused

[Jim99]

Why would we need to point that out? I thought that was common knowledge now and everyone knows it?

There's a personal finance discussion area I check in on occasionally, and at least once per month someone posts to discuss a regular savings account and claim they've been scammed because they only got half the interest, and then at least a couple of people will pop up to say "yeah, it's actually 3.5%" etc. Drives me crazy.

 

[dlockers]

Why would we need to point that out? I thought that was common knowledge now and everyone knows it?

Dude. This very thread, yeah?

 

[Mercenary Keyboard Warrior]

Such a surprise to come across one of these threads and not find some moron claiming that you only get half of the interest rate advertised

yeah

Because like the OP people get confused and think they will get generally roughly twice as much interest as they will.
So people tried to dumb it down to "work on half the interest rate" and then those that don't understand why start requoting it.

I made a spreadsheet for this today to work out how much more interest you earn from opening up a regular saver near the end of the month rather than the start.

For the Natwest 8% £250pm account it was about £15 more. For first direct this doesn't work as they restrict you to adding money on the same day of the month as the account opening.

Most run on a full year from account opening, not a specific date in the month, so the date you open is irrelevant.
But not all so it can be worth looking.
But the trick is to have the money in for as long as possible, so if an account allows you to open in say March, but will close at the end of the following March you in effect can gain more interest by paying in at the start of the month.
Unless yo have found an account that operates on balance at the end of the month to pay interest (highly unlikely) the earlier you pay in the more you gain (daily interest)

 

[Disco_P]

Most run on a full year from account opening, not a specific date in the month, so the date you open is irrelevant.
But not all so it can be worth looking.
But the trick is to have the money in for as long as possible, so if an account allows you to open in say March, but will close at the end of the following March you in effect can gain more interest by paying in at the start of the month.
Unless yo have found an account that operates on balance at the end of the month to pay interest (highly unlikely) the earlier you pay in the more you gain (daily interest)

The reason it works is that maturity is on the year anniversary. Using Nationwide's regular saver as an example. Open on Jan 28th, add £200 on opening then another £200 in a couple days on the first of the month, and each first of the month. Come next January 1st you'll have £2600 in the account, which will continue to gain interest until the 28th.

If you open on Feb 1st, deposit £200 and each month on the first, on January 1st you'll have £2400 which will be your final balance until maturity on the 1st Feb 2024.

Essentially you get nearly a year's extra interest on £200 which is about £15 on the 8% account above.

This works for Nationwide, Skipton and, I think, Gatehouse.

 

[Mercenary Keyboard Warrior]

The reason it works is that maturity is on the year anniversary. Using Nationwide's regular saver as an example. Open on Jan 28th, add £200 on opening then another £200 in a couple days on the first of the month, and each first of the month. Come next January 1st you'll have £2600 in the account, which will continue to gain interest until the 28th.

If you open on Feb 1st, deposit £200 and each month on the first, on January 1st you'll have £2400 which will be your final balance until maturity on the 1st Feb 2024.

Essentially you get nearly a year's extra interest on £200 which is about £15 on the 8% account above.

This works for Nationwide, Skipton and, I think, Gatehouse.

Yeah so as I said maximise the time its open for.
Its a bit of a curiosity since your talking building societies there and they often lag behind still.

But they vary. Halfiax for example you must not add funds before your anniversay date so if you open on the 28th then the earliest you can pay in is the 28th of the following month.
Santander its calendar and you setup a recurring to take the payment on the anniversary date each month. The account is closed (well cleared) on the one year anniversary within a couple of days and the new payments started.

I am not sure how much attention they pay to the timings but you need to check each ones T&Cs to see what they say specifically in regards each months payments.

I paid extra into Santander once by mistake, realised a week or so later, took it back out but never heard anything about it!

 

[D-Ranged]

Thanks for all the help/answers but this explains it better to me. I naively thought the 7% would be calculated from the £3600 in my savings at the end, still better than previous interest rates though.

If it was that easy, people would be remortgaging, dumping it all in savings on the last month of the year and pulling all the interest!

 

[EdGey]

No no, the oldies have their cash sitting in 0.01% current accounts so well played

I think you mean they have it tied up in a £700k house they paid £250k for - 7% is childsplay.

Nice rate by the way, mines 4.66%

 

[zom247]

If it was that easy, people would be remortgaging, dumping it all in savings on the last month of the year and pulling all the interest!

You can only put a max of £3600 (£300 per month) into the savings account I mentioned, no idea about any others.