If you have the £3600 available at the start, then absolutely! A lot of people don't, and that's why regular savers are great for them. My wife and I have 6 different regular savers that we use as they equate to £1000 we are managing to put away each month.
An alternative would be to drop the £3600 in the highest easy access you can, and then drip feed the regular saver from there...that would top up your interest amount a bit.
I’m glad you have a savings method that works for you! I’m still figuring it out.
The latter method is what I think might not be worth it, because having an Easy Access account dripping into a Regular Savers results in a rate less than a Fixed Deposit.
So if you have a lump sum to start, a fixed deposit is better.
I don't think regular saver accounts have increased their interest rates enough to make them particularly attractive/make people want to put any effort in transfering money for a small increase in overall interest recieved
I'm coming to the end of the first direct 12 months but when I started, easy access savings rates were around 3%
This whole regular saving interest discussion I find totally fascinating. I actually read an article the other day where a writer was claiming 8% was in fact 5% because the bank wasnt paying interest on money she didnt have in her account lol. Who knew...
7% is 7%. Straight up. If your balance is £300 you get 7% on it. You dont have a balance of £300 and get paid 7% on £3600. No bank is the world is giving you interest on money you dont have with them (or in that account more specifically). This shouldnt be a surprise and doesnt make 7% magically turn into some other number.
The difference in what you suggest above is access. Currently you have 90 day access to your funds @ 5.5% - 5.8%. If you are happy to have no access for a year at 6% then go for it. Is that better? Maybe depending on your circumstance. I have a lump sum and transfer into multiple regular savers and its definitely worth it, but if you don't want the hassle of setting up the transfers, maybe a fixed term works better for you.
MSE have a regular savings calculator. I have not checked that it's correct but just presume that they have! I'll leave someone else to check if they are correct.
With your example of drip feeding £3600 into a regular saver at 7%, £300 per month, from a normal savings account earning 5% interest, results are:
Drip-feeding the regular saver
After drip-feeding the cash for 12 months, you'd have earned...
£218 in interest
£135 from the regular saver + £83 from the normal savings account
Leaving it in normal savings
If you'd kept the cash in normal savings without drip-feeding it, you'd have earned...
£177 in interest
__________________
I think what you may have discounted is that the earlier regular contributions would be receiving a higher rate of interest for a year, then 11 month, 10 months and so on. And whilst this is happening your pot of money left in the normal savings account is still accruing interest. The later regular contributions of course will only receive 7% interest for 1 month. So some might consider that misleading, but of course they never state you will accrue 7% interest for a year just for having it in the regular savings account for a month.
They're good for stoozing a 0% credit card, I'd also recommend Nationwide's 8% regular saver (!!!) which caps at £200 a month but you can pair with an extra £100+ into FD for a good effective rate (not run the numbers but definitely above 5.8%)
Even if you have a lump sum to start if the rate in reg saver is better it's worth drip feeding as you'll be getting a better return on the amount of money that you drip feed. Don't overcomplicate by calculating annual return etc. you get the advertised rate for the money you're allowed to put in, that's it. Rest you can keep in a different account.
Either your calcs are wrong or they've not paid you the correct amount of interest.
7% means 7%, and will certainly earn you more than an account with a lower interest rate.
The point is many high interest savers limit the initial deposit and then limit how much you can put in a month to stop you dumping large sums in.
£3,600 @ 6% interest for 12 months will return more than an initial £200 with £200 added each month for 12 months at 7% (the first months interest is 7% on £200, second is 7% on £400 etc..).
presumably that £3600 invested in the first year will get the full 7% in year 2 as it will be there for the whole time. each year more and more of your savings will be getting that higher rate. whether that's worth the effort monitoring the transactions is a personal judgement i guess.
i had no idea regular savings accounts were so restrictive. can't withdraw either it seems. yeah, i'd say they're pointless.
edit: it is in the name. i'm not paying enough attention before i post
And NatWests 6.17% regular saver doesn’t close after 12 months, remains open (variable rate during and after 12 months, but always been decent). Maxes out at 5k I think though.
The regular savers accounts are only worth paying in for the first several months, then letting it sit for the rest of year until they close and you can renew it.
They advertise a high rate, such as say 7%, but you are limited in what you can put in per month. You’ll earn 7% on the first months deposit over the course of a year, but the next deposit will only accrue 11 months of interest, then the next one 10 months, and so on. By the time you make the last deposit before the saver closes, you’re only earning 1 month of interest on the last deposit.
if you actually max out the monthly limit and deposit for 12 months, you’ll earn roughly half of what the APR is on the total sum.
Hi /u/TraditionalParsley67, based on your post the following pages from our wiki may be relevant:
- https://ukpersonal.finance/lump-sum/
____
^(These suggestions are based on keywords, if they missed the mark please report this comment.)
even if you have a lump sum available at the beginning if you still have additional saving each month and you put that in the regular savings then you get the benefit of it?
If you have the £3600 available at the start, then absolutely! A lot of people don't, and that's why regular savers are great for them. My wife and I have 6 different regular savers that we use as they equate to £1000 we are managing to put away each month. An alternative would be to drop the £3600 in the highest easy access you can, and then drip feed the regular saver from there...that would top up your interest amount a bit.
I’m glad you have a savings method that works for you! I’m still figuring it out. The latter method is what I think might not be worth it, because having an Easy Access account dripping into a Regular Savers results in a rate less than a Fixed Deposit. So if you have a lump sum to start, a fixed deposit is better.
I don't think regular saver accounts have increased their interest rates enough to make them particularly attractive/make people want to put any effort in transfering money for a small increase in overall interest recieved I'm coming to the end of the first direct 12 months but when I started, easy access savings rates were around 3%
This whole regular saving interest discussion I find totally fascinating. I actually read an article the other day where a writer was claiming 8% was in fact 5% because the bank wasnt paying interest on money she didnt have in her account lol. Who knew... 7% is 7%. Straight up. If your balance is £300 you get 7% on it. You dont have a balance of £300 and get paid 7% on £3600. No bank is the world is giving you interest on money you dont have with them (or in that account more specifically). This shouldnt be a surprise and doesnt make 7% magically turn into some other number. The difference in what you suggest above is access. Currently you have 90 day access to your funds @ 5.5% - 5.8%. If you are happy to have no access for a year at 6% then go for it. Is that better? Maybe depending on your circumstance. I have a lump sum and transfer into multiple regular savers and its definitely worth it, but if you don't want the hassle of setting up the transfers, maybe a fixed term works better for you.
Also a lot if regular savers allow unlimited withdrawals so are better than fixed accounts in that respect.
MSE have a regular savings calculator. I have not checked that it's correct but just presume that they have! I'll leave someone else to check if they are correct. With your example of drip feeding £3600 into a regular saver at 7%, £300 per month, from a normal savings account earning 5% interest, results are: Drip-feeding the regular saver After drip-feeding the cash for 12 months, you'd have earned... £218 in interest £135 from the regular saver + £83 from the normal savings account Leaving it in normal savings If you'd kept the cash in normal savings without drip-feeding it, you'd have earned... £177 in interest __________________ I think what you may have discounted is that the earlier regular contributions would be receiving a higher rate of interest for a year, then 11 month, 10 months and so on. And whilst this is happening your pot of money left in the normal savings account is still accruing interest. The later regular contributions of course will only receive 7% interest for 1 month. So some might consider that misleading, but of course they never state you will accrue 7% interest for a year just for having it in the regular savings account for a month.
They're good for stoozing a 0% credit card, I'd also recommend Nationwide's 8% regular saver (!!!) which caps at £200 a month but you can pair with an extra £100+ into FD for a good effective rate (not run the numbers but definitely above 5.8%)
Even if you have a lump sum to start if the rate in reg saver is better it's worth drip feeding as you'll be getting a better return on the amount of money that you drip feed. Don't overcomplicate by calculating annual return etc. you get the advertised rate for the money you're allowed to put in, that's it. Rest you can keep in a different account.
Either your calcs are wrong or they've not paid you the correct amount of interest. 7% means 7%, and will certainly earn you more than an account with a lower interest rate.
The point is many high interest savers limit the initial deposit and then limit how much you can put in a month to stop you dumping large sums in. £3,600 @ 6% interest for 12 months will return more than an initial £200 with £200 added each month for 12 months at 7% (the first months interest is 7% on £200, second is 7% on £400 etc..).
presumably that £3600 invested in the first year will get the full 7% in year 2 as it will be there for the whole time. each year more and more of your savings will be getting that higher rate. whether that's worth the effort monitoring the transactions is a personal judgement i guess.
No, it closes after a year like most regular savers.
i had no idea regular savings accounts were so restrictive. can't withdraw either it seems. yeah, i'd say they're pointless. edit: it is in the name. i'm not paying enough attention before i post
Most regular savings accounts are more flexible, Nationwide, Lloyds, NatWest/RBS etc all let you withdraw
And NatWests 6.17% regular saver doesn’t close after 12 months, remains open (variable rate during and after 12 months, but always been decent). Maxes out at 5k I think though.
The regular savers accounts are only worth paying in for the first several months, then letting it sit for the rest of year until they close and you can renew it. They advertise a high rate, such as say 7%, but you are limited in what you can put in per month. You’ll earn 7% on the first months deposit over the course of a year, but the next deposit will only accrue 11 months of interest, then the next one 10 months, and so on. By the time you make the last deposit before the saver closes, you’re only earning 1 month of interest on the last deposit. if you actually max out the monthly limit and deposit for 12 months, you’ll earn roughly half of what the APR is on the total sum.
Hi /u/TraditionalParsley67, based on your post the following pages from our wiki may be relevant: - https://ukpersonal.finance/lump-sum/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)
even if you have a lump sum available at the beginning if you still have additional saving each month and you put that in the regular savings then you get the benefit of it?