Monthly saver? any good at 8%?
i wish to save £250 per month over a two year period without making any withdrawls.
can you please recommend me a savings account which offers good interest in return?
lloyds tsb are doing a monthly saver of 8% interest rate fixed for a year. are they any good? shall i go for this one?
thanks
Answers:
with a monthly saver, you will only get on average about 4.25% gross. this is because u will only get 8% on the entire balance for 1 month at the end and only 8% on the £250 at the beginning. If u still only want to save £250 a month, this would probably be your best option. If you were able to save a lump sum however you would get a much better rate of interest. Halifax offers 6.26% on these Web saver bonds at the minute.
Interest rates are going up, it seems. But if you wait, you will lose out on the interest now. Go for it!
I'm not so familiar with Lloyds TSB/ British financial institutions, but one option you might check out is ING Direct online. You can set up a monthly automatic savings plan pretty easily, and the current interest rate is 4.5%. This is for the US version, but I'm pretty sure they're international.
Of course, 8% is better than 4.5%, so maybe you should go with what you've got.
General understanding of how to use a regular savings account is floored.
It is true high interest regular savings accounts have a maximum deposit per month (in effect halving the quoted rate) and have penalties for missed payments / withdrawals.
However if you already have a lump sum in an instant access account interest earned on the balance is increased when drip-fed from the instant access to the regular saver.
Before taking out the 8% account allowing a max of £250.00 per month (£3000 per year) consider the Yorkshire Building Society regular saver allowing deposits of up to £500.00 per month (£6000 per year) at 7% which can offer a greater overal return if you have more than £250.00 per month to deposit.
But if you money is in an ISA at the moment ... leave it there! No savings account will match the interest rate after tax.
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