Premium bond / ISA

JASR said:
The above details are on current accounts not regular savings.
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You don’t understand his point mate.

it’s not 5% on all £30k, it’s 5% on the first £1,500 then on each monthly payment in. It works out at 2.5% on the money saved over the course of a year. It’s an old bank trick to make people think they’re getting a better rate than they really are.

And it’s a current account that you have to save monthly into. It’s absolutely pointless taking out a regular savings current account when you’ve already got a lump sum of money.

They are however, useful for people starting to save for the first time.
 
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SWP's back said:
You don’t understand his point mate.

it’s not 5% on all £30k, it’s 5% on the first £1,500 then on each monthly payment in. It works out at 2.5% on the money saved over the course of a year. It’s an old bank trick to make people think they’re getting a better rate than they really are.

And it’s a current account that you have to save monthly into. It’s absolutely pointless taking out a regular savings current account when you’ve already got a lump sum of money.

They are however, useful for people starting to save for the first time.
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No I do understand.
It’s £2500 in the bank all the time earning 5% from the start.
The money in/out is a condition of getting the 5% on the static £2500.

this is just for static money in current accounts as I detailed.

my final part of my comment was about regular savings accounts, which is different. And yes I know they are only 1/2 the headline rate, as you say.

edit: but even this halving of the rate is slightly disingenuous as long as you realise that the money being paid in is only ‘working’ for a gradually decreasing time period. Eg on a yearly account. The 1st payment gets the 5%, the 2nd payment gets 11/12 of 5% , 3rd 10/12 of 5% etc.
So the amount of interest earned on a payment is directly related to how long it’s in the savings account. It would be naive to assume that a payment into an account on the last month of the account would earn 5% wouldn’t it?
So the money paid in over the months can be used to earn more interest again, in the same rolling year, in another account.
 
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Sounds like JASR does understand it. I have a multitude of current accounts with cash circulating between them, although not quite as rigorously as JASR suggests. Another benefit of having numerous current accounts is that you can use one for switching when banks offer cash to do so. For example, I switched one current account that stopped paying interest into natwest last year and was given £125. If I keep the account for one year I will be given another £50. Then I will switch the account to another bank that will give me money to switch.
 
Santander current account pays 1·5% on 20k. But there is a monthly fee of £5 and cash back on bills paid by direct debit. Eg 3% on internet telephone I think.
 
God these numbers are depressing. I swear when I had fuck all money regular savings accounts used to pay out over 5%. Now I've got some and it's barely worth the time it would take to research the options.
 
SWP's back said:
You don’t understand his point mate.

it’s not 5% on all £30k, it’s 5% on the first £1,500 then on each monthly payment in. It works out at 2.5% on the money saved over the course of a year. It’s an old bank trick to make people think they’re getting a better rate than they really are.

And it’s a current account that you have to save monthly into. It’s absolutely pointless taking out a regular savings current account when you’ve already got a lump sum of money.

They are however, useful for people starting to save for the first time.
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That's interesting - maybe I've not understood with my savings.
I've got some in an account that you have to give 90 days notice for and get 1.77%.
I'm taking money from this to put in two regular savers because they pay 3% and 2%.
Am I best keeping it in the 1.77% account?
(tying the money up long term isn't an option)
 
117 M34 said:
That's interesting - maybe I've not understood with my savings.
I've got some in an account that you have to give 90 days notice for and get 1.77%.
I'm taking money from this to put in two regular savers because they pay 3% and 2%.
Am I best keeping it in the 1.77% account?
(tying the money up long term isn't an option)
Click to expand...

Goto https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/#mands to work out the interest you'd get on a savings account (or bank account), that drip feeds into a regular savings account:
In your example you don't specify the maximum amounts in the savings account or maximum monthly regular savings account payment, so it's hard to say, you'll have to plug the numbers in yourself.

The best regular savings account on MSE is currently 2.75% with HSBC or FirstDirect (if you have an account with them - though it doesn't cost you anything to open a current account), but they have a max of 300 or 250 savings per month.

The best easy access savings account on MSE is currently 1.45% with Marcus.

So in the MSE calculator, if we start with £3600 in the 1.45% account. That would earn £52.2 in a year by itself
If you then add in the HSBC £300 regular saver with 2.75%. That would earn £24 from the savings account, and £39 from the regular savings account, earning £64 in total.
All the money would have moved from the normal savings account over a year, into the regular savings account.
At that point you'd move the money+interest out of the regular savings account into another savings opportunity/spend it.

So it does pay to drip feed from a savings account into a regular savings account, as long as the regular is of sufficiently higher percentage value than the savings account.
But you can use their calculator to see that.

Of course you could earn more money still (if you had money which wasn't 'working') by just paying direct into the regular savings account.

If you are having to save twice per year, say, for a tax bill (me!), it makes sense to at least make the money work as hard as you can, to
a) save up the money to pay the bill over a period of time without worrying
b) earn some interest

The other (completely safe) alternative is, as already discussed Premium bonds, but again, use the MSE calculator to work out what the average person with the same holdings for the same period of time would earn.

I have many bank accounts and savings accounts (i'm incredibly lucky), and I'm a bit OCD with it all, but I'm happy to earn enough money for a meal out on each saving account. Though these days the effort of controlling is hardly worth it, I wouldn't bother if you can't earn more than 2.75%, or it's not a doddle to setup a Standing Order to a regular saver linked to an existing bank account. There used to be many accounts doing 4%+ which makes it worthwhile, but there's only the Nationwide now (as long as you haven't used them before... :-) ).
 
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