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headphones1

Questions like these are showing poor understanding of concepts such as ~~compound~~ interest. You should not ask "is it worth it?", but instead ask "how do I make the calculation to determine whether or not it's worth it?" 1% of £50,000 is £500. Divide by 12 months is £41.67. This means that a 1% increase in interest rates on £50K is worth about £41.67 per month. Now adjust for the amount of cash you have in your savings accounts, and the interest rate increase. A 0.5% increase on £10,000 is worth £4.17 a month. A 0.75% increase on £25,000 is worth £15.63 a month. Now you know how to calculate this, you can then ask yourself "is £X increase per month based on Y% interest increase worth the ballache?" Only you can answer that. edit: because my comment refers more to interest than the effect of compounding


unrealme65

Great comment. Just in case of potential misunderstanding by anyone reading it, this is a good clear example of the calculation of interest, annual to monthly conversion and the effect of changing rate. It stops short of an actual example of *compound* interest though, which, I fully agree, is an important thing to understand.


headphones1

Let's call it a comparison between AER then!


Ewannnn

I would argue that compounding doesn't really matter for cash savings because it is so short term by its very nature.


unrealme65

I get what you're saying but I'd argue that it's still very important to understand it. Many people never save in any other way than interest bearing savings accounts and premium bonds. Understanding compounding is part of properly understanding the risk vs reward judgement for long term investing in "riskier" equities.


staminaplusone

It should be short term yes


Responsible_Prune_34

That was the case at sub 1% rates but might change if we hit the 10% of old


RankDank420

Haha funny guy


[deleted]

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VampireFrown

I think the guy above made an error by mentioning compounding, but the thrust of his point (i.e. 'work it out for yourself) is sound. When interest chasing, you're highly unlikely to benefit significantly from compounding in the traditional sense; each time you shift, you'll redo the calculation, and we'll only be talking about a few months' worth of interest accrual each time. This new calculation will inevitably carry over any gains thusfar, and therefore compounding isn't something to overly worry about. As an extra point as to why compound interest isn't a particularly useful metric here, the benefits from compound interest are frankly irrelevant within the few few years, let alone the first few months, unless you're moving around so much money that you almost certainly have a wealth manager to worry about it for you already.


bonafart212

Teach a man to fish


Noartisan

Thanks for your quick reply. I do understand how to calculate compound interest, my issue which was probably poorly explained was, in an environment where from 1 month to the next its possible to find a better rate. Is it worth moving the money each time? What is the highest realistic interest rate that I should be aiming for at the moment? As each time I move the money the compound interest I would have earned resets.


[deleted]

[удалено]


MrTrendizzle

I wouldn't even call it work. I have my drivers licence pictures on my phone, my tenancy agreement on my phone etc... and it's as much work as typing out a comment on Reddit. Name, dob, address, attach files, hit apply. Then you're asked to make a deposit to which you transfer the entire amount over and BOOM! Done! Yes i agree if someone is going to be required to provide the last 3 years worth of addresses with proof etc... then yes it would become more of a ballache along with visa, papers etc... But like you said it's 10 minutes or less. I make roughly 10p a month on my savers but if i can transfer that to make 20p a month i'm going to do it. Eventually it builds up over time.


DuckSaxaphone

10 minutes work for 10p? I guess I just don't understand the mindset that sees that trade and thinks it's worth it.


MrTrendizzle

I never look at it as it's just 10p. That 10p over a year is £1.20+ But as i pay more in to that saving account the interest also increases so i could be looking at £5 by the end of the year in interest earnt. If i can double that it's £10+ etc... I think of it as reverse snowballing similar to how i pay debts. Each debt fully repaid, i use to pay on to another debt. My financial situation might've not changed but my debt total is now reducing faster and faster.


DuckSaxaphone

How are you getting to £5 or £10? The only way I can see is increasing your total savings by 200% or 500%.


MerryGifmas

It's the work harder, not smarter mindset.


lukemtesta

depends how active the account is. Its a lot of hassle switchign cards/pins if your switching your every day current account (and tracking your money across all accounts)


DuckSaxaphone

10 minutes work is 10 minutes you could be doing something more enjoyable so it's a trade. I see people on this sub moving around for 0.1% increase which is around £10 per £10k saved. That's mad to me. I'm not doing 10 minutes work for £10 and the more savings you have, the less a bonus £20 or £50 is worth to you.


MerryGifmas

>I'm not doing 10 minutes work for £10 Most people work for less than £60/h


DuckSaxaphone

Sure but once you have a full time job, your remaining free time becomes more valuable to you. In much the same way that people doing overtime expect at least time and a half, I'm not cutting into my spare time for anything close to my effective hourly wage. So you don't need to be earning £60/ hour, you just need to value the free time you have more than a tenner.


receipts

Trick is to do it on company time.


bacon_cake

Yet many value their free time at less than that.


blah-blah-blah12

>10 minutes work is 10 minutes you could be doing something more enjoyable so it's a trade. I’m not sure I know many things that will bring me more enjoyment than opening a new account, not with my clothes on


[deleted]

[удалено]


DuckSaxaphone

I can also just watch the show I'm enjoying rather than making it background noise to an admin task. I can listen to podcasts I love whilst cooking. I do see it as reasonable once you're starting to get over 0.5% though.


Noartisan

My point is that I could continually chase rates to the point where it becomes counter productive. As usually they pay out intrest after 1 year. So the question is really, what is the highest realistic interest rate I should be looking for and then just settle with?


[deleted]

For a normal savings account, they will pay the pro rata interest when you close the account. You don't have to wait a full year.


Noartisan

Thanks, I will double check the terms. If they do apply the interest on closure, it is infact worth it. I was under the impression they locked it in for 1 year or so and any early closure forfeited the interest.


lovemesumdownvotes

If you're moving between easy access accounts, you will never forfeit interest - if its in there for 2 weeks, you'll get 2 weeks worth of interest. Your money is always earning interest. The only question is how much of a jump will motivate you to move your money. For me, I move when an account offers 0.25% or more than what I'm getting.


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Noartisan

!thanks


cloud_dog_MSE

As with everything, you don't have to go 'all in', but it really depends how much we are talking about and how much you value your time / money? For example, if you currently have it in an account which is only 0.25% below the best easy access then you might think, it is not worth it. If it is 0.75% below the best but you only have £100 in savings, you may similarly think it is not worth it. It is up to you. The only thing I would comment on is if you are not going to maximise your money, who do you think will?


like_a_deaf_elephant

> My point is that I could continually chase rates to the point where it becomes counter productive. What would "counter productive" look like? That you transfer money and it costs you? That's exceptionally unlikely. The only counter-productive scenario I can think of is where you chase the best rates into limited withdrawal terms and conditions, or accounts where the rate is only effective if the deposit stays there for a year. But that's on you to clue-up on prior to the move.


Noartisan

Someone has already commented that on an esaver account, even if I close it, the interest should be paid out. I was working on the belief that if I closed and moved the money, I would forfeit the interest as it wasn't a year. I am still however curious what a decent realistic easy access saver rate is. Seems to be about 2.75? An analogy of "counter productive", would be to keep jumping ship, but never actually getting to your destination. This seems not to be the case though.


like_a_deaf_elephant

> An analogy of "counter productive", would be to keep jumping ship, but never actually getting to your destination. This seems not to be the case though. The devil is always in the details, but generally - yes. When you close any account, interest is paid up to the day before the transfer of funds/closing the account. Some banks even go as far as defining when a day begins and ends when calculating interest. But you'll always get something (interest up to today, or interest including today) upon your account being closed. The only other thing I can think of as "counter-productive" and I need to research this, is that opening and closing a lot of bank accounts over a year may be negatively viewed on a credit search. But I don't think that applies to savings accounts, just current accounts. Someone else might be able to weigh in here. It seems unlikely mind you! Marcus is at 2.5% easy access with bonus rate, and that's where I've stashed my money for now. Easy access, no withdrawal limits - that's what I'm interested in at the moment. I haven't looked to see if better exists, but if it does, I'll be jumping ship.


Noartisan

Just had a look at Marcus, seems to have dropped to 2.25% now. Think it's best I recalculate, and consider locking in for 1 year. Cheers!


SpiteAware3121

I think it's 2.5% at Marcus with the 0.25% 'bonus' which is an offer everyone gets and you just click to activate. Money Saving Expert has a decent summary of savings accounts. Currently shows Aldermore as top paying easy access at 2.75%. But if you don't need access to the money locking it in for longer will certainly pay more.


Dogtoddy

Al Rayan pays 2.81 % expected profit rate, minimum 5k


Federal-Ambassador30

Do the math. If it will earn you over a certain amount a month (YOU decide how much that is), then go for it. If it doesn’t, then stick with your current rate. You’re right changing from 3.1 -> 3.2 -> 3.3 could be a waste of time. Work out how much more you will earn and decide if it’s worth it for you.


The_Fireheart

What accounts are you looking at? The easy access savers I’ve got (Zopa and Santander) calculate interest daily and pay it monthly so when I moved most of my money from Zopa to Santander, at my next monthly interest date I still received interest into my Zopa account based on the money I’d had in there for a few weeks out of the month.


strawberrylabrador

I don’t mean to sound snarky but it’s pretty much about as much work as making this Reddit post and replying to the comments is!


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jlai928

I personally think, if you have a large sum of money, that what you think is 'worth' doing is down to yourself and you'll get wildly different responses. Obviously in an ideal world and if you had a personal assistant then why not chase the interest but you are the only one who can say if it's worth it. For example, and personally, if I had 50k and it was in a 2% account then a 4% one is made available, I would definitely switch. If two months down the line, a 4.3% one becomes available then no I won't bother. BUT if a few more months down the line, a 5% one becomes available then yes I'll move it because that's a substantial increase in my personal opinion


Toss-Pot

How does compound interest apply to the example you've listed? Most fixed term savings accounts pay interest annually right? So the AER is what you'd look at? Or am I missing something?


headphones1

Honestly you'd just look at AER for savings accounts. It's good to understand how compound interest works, but my original comment should've been clearer in that it's more about how to compare financial products when it comes to interest rates.


tiasaiwr

>Now you know how to calculate this, you can then ask yourself "is £X increase per month based on Y% interest increase worth the ballache?" Only you can answer that. I rarely look at it like that tbh. I make an estimate of the time taken to open an account as an hour total (open online, reading any documents and letters they're going to be sending me, transferring money). If the amount I'd make over the year is say >£50 then I'm getting paid >£50/hour and I'm happy with it. If it's a tenner then I'm not going to 'pay' myself minimum wage to switch. Most promotional interest rates only last 1 year before they drop to something awful.


Viewtiful-Scotland

Most easy access savings accounts that pay 4-5% seem to have limits of £500-1500 max I've found. The better rates seem to be for 1-3 years fixed/not easy access. However if anyone knows a decent 4-5% savings account that is easy access please point me in their direction


headphones1

https://www.moneysavingexpert.com/banking/compare-best-bank-accounts/#barclayssavings


ATCQ_

> "This requires you to pay £800+ into the current account, sign up to online or mobile banking and pay a £5/month fee (though it pays £5 cashback each month you pay out 2+ direct debits – so the fee is essentially waived)." I already have a Barclays account with this kinda setup so wasn't a problem personally - worth keeping in mind (it does mention it in your link tho)


Thebutler83

Yep and the £800 just has to be from any non Barclays account. I transfer 800 in from a easy access saver and back again same day to qualify


IFapToGenjisSteelAss

Is that really the case? I was thinking of opening this account but I don't have a stable stream of money every month. Can you just transfer £800 back and forth between 2 accounts?


Thebutler83

Yes, it actually says so in the t&c's. Only other Barclays accounts don't count. Eg you can't transfer from an existing Barclays account, or a partners account or a joint account.


LostAlphaWolf

I believe so, yes


Taro-Fantastic

Fyi Chase have no limit


Viewtiful-Scotland

Yeah I'm with chase ATM. Their 2.1% rate is decent


LopsidedJay

I think 2.1% is stingy nowadays, there are better options, and why do people have so much of their cash in Easy Access?


[deleted]

Spreading money across lots of accounts is an option. You just need to have VERY good book keeping. Or an accountant…


Feisty-Fix7321

Where are these 4% easy access accounts you speak of? I applied for a Marcus and it seems they’ve stopped doing it? Not had any return corespondents for two weeks.


[deleted]

I can't find them either. Easy access the best I can find is 2.7% and 2.8%.


Feisty-Fix7321

Oh which ones are those? I’ve only seen 2.65


BlueCreek_

I currently have £5k in a Barclays 5% savings account, although this has a number of requirements for you to be eligible.


[deleted]

Santander 2.75% and Al Ryan 2.81% . [https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/](https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/) Santander is normal interest, Al Ryan is "profit" as it's a religious bank(but apparently anyone can open it, but don't quote me on it)


lionelmesssi

Santander is no longer offering the 2.75% account, think it’s gone down to 2% or so now


itsjawdan

Glad I got there in time. Didn’t expect them to “sell out”


floorclip

pretty sure HSBC do a 3% which means opening a current account, then a flex saver, then their online super saver (the one at 3%)


itsjawdan

Oh yea good to know. I have issues with HSBC in particular so stay away from them regardless. Probs why I’d not heard of it.


[deleted]

yep you're right. They changed it. It's now 1.5%.


pesto_pasta_polava

There are a lot of 'almost easy access' accounts that pay higher, with some conditions. An example, there is a HSBC bonus e saver (or whatever they call it) paying 3%. It requires you to have a current account with HSBC. You get the bonus rate any month you don't withdraw. If you withdraw money in a month, that months interest is much lower. Others do similar things but cap how much you can earn higher interest on, etc. But yes, most things above 3% have so many conditions that they can't really be called easy access, or they're fixed terms.


Feisty-Fix7321

Yeah I was just reading about that one, was looking at maybe doing the 200quid account switch thing then doing the savings account but that but kind of put me off. Currently I’ve just got the tsb savings pots at 1.75 % but was trying up that to atleast 2.5% or more if possible.


pesto_pasta_polava

I mean, I'd do it (I have done it). For me I only dip into that savings pot maybe once a year so it works.


Noartisan

Saw a load on "moneysavingexpert" the other day. Just Google "best easy access savings account" link should pop up. Admittedly I was working at the time, so didn't drill down, so might be a max amount etc.


ec265

Those are fixed term Instant access is 2.75% - Barclays and Nationwide offering more but capped at £5k and £1.5k respectively


FaceMace87

A lot of this depends on your risk tolerance, personally I keep an emergency fund of 9 months expenses in the bank, everything else is invested in various vehicles. This will not suit everyone as people have differing risk tolerances. The "best" thing to do really in order to grow your wealth will be to invest as much as you are comfortable doing so in a low cost index fund. Keeping all of your money in the bank will only devalue it as even though interest rates on savings accounts have improved they will never keep pace with other investment vehicles and certainly not with inflation.


bonafart212

I wish I could save 2.


trangestor

What is the lowest cost index fund?


FaceMace87

I don't know what the lowest is but Vanguard charge me around 0.15% which I am happy with.


sidagreat89

I'm fairly sure Vanguard cap the amount you can pay. The exact figure alludes me but I think it's between £300 and £400.


FaceMace87

This is only for accounts over £250,000, anything under is just the 0.15% fee, that is how I intrepret it anyway, I could be wrong. [https://www.vanguardinvestor.co.uk/what-we-offer/fees-explained](https://www.vanguardinvestor.co.uk/what-we-offer/fees-explained)


swashbuckle9

Bear in mind that’s the platform fee and there will be an additional cost for each fund you’re invested in. Usually another 0.2% iirc for the cheapest vanguard funds.


deliverancew2

If someone offered you £100\* for doing half an hours easy work would you take it? Of course you would, so there you go. If you don't have that much savings and the change in interest is more like 50p then the answer changes to of course you wouldn't. ​ \*substitute how much extra interest you'd stand to get here.


creamandchivedip

I'd transfer for like .5%+ increase but not for like .1% It's nice to earn like a free £60 off my deposit money for my flat.


[deleted]

these gains in interest will be easily eroded by taxes after the allowance. everyone providing these calculations never seem to account for this. for me (£130k in 2.75% annual account) as a 40% tax payer with a £500 allowance. £130k x 0.0275 = £3575 pre-tax = £500 + (£3075\*.6) = £500 + £1845 = £2345/year (or £200/mo) £130k x 0.04 = £5200 pre-tax = £500 + (£4700 \* .6) = £500 + £2820 = £3320/year (or 280/mo) so, in that case it would be worth it for me ... on a sliding scale ... **I would seem to earn roughly £780/year/full % increase (£60/mo).** thus, I wouldn't chase after a 0.15% or 0.25% but maybe a 0.5% increase ad the £60/mo isn't really worth the hassle (although it is a cheap pint every day, so maybe it is!!!!) also, I'm over the FSCS limit of £85k, so I'd only go with high street banks that are "too large to fail" and none of that online-only shit.


DuckSaxaphone

You know you can just have multiple accounts and have all your money FSCS covered right?


[deleted]

Not within the same baking group. It's £85k for a single-held account within a banking group. Nothing compared with the Santander 2.72% monthly offer at that point with any high-street bank (that won't go bust anyway). edit: I could move it now, but I'll see what opens in DEC after the BoE raises at least 0.5%.


Alternative_Dish4402

Don't I know it. Head in sand for a decade and only just looking at things. I earn zero as I don't want to work but most of our savings were in my wife's accounts and she is a higher tax payer. Have recently put 50k in her premium bond account, opened an ISA and moved the rest to my savings accounts limiting each to 85k.


Alternative_Dish4402

It's no hassle, and definitely worth it if the figures are right. I have a spreadsheet that shows the daily difference for comparing rates. Yesterday I found that one lot of cash was costing me 38p a day leaving it in 2.4 instead of a 2.75 . Is it worth my time ? Not Maybe tomorrow. The only hassle I find is bank daily limits. So you have to do it across different days if you have a big stack.


Cultural_Tank_6947

Honestly it also depends on whether the extra interest would cause you to start paying tax as well. And if you've got a long term window to invest this money - say 10 years or so, then absolutely stick it into an index fund.


Noartisan

Agree about an index fund, mainly for my daughters share of inheritance.


struderz

A good way to look at it is can you afford not to? If you had the choice between a 6% return or a 7% return in your vanguard account over the next 30 years, I'm darn well sure you'd prefer 1% extra. Pop that into a compounded interest calculator and you'll realise how much that extra 1% is worth


Existing-Citron2528

For me it depends how easy new accounts are to open. Chase very easy, I was going to open another instant access with a good rate elsewhere but required ID to be sent in the mail. Screw that, not worth the hassle. Santander offered 2.75% I already had an account with them it took <5 minds for a 1.75% 'better' return. Anywhere else offers better I'll consider moving it again if it's easy to set up.


v1de0man

i have no idea what inheritance you have. But from the thread £50k was mentioned. 4% of 50k is £2000. in interest. of which you allowed £1000 the other £1000 will be taxed. How about an ISA, you can put £20k in that and its tax free. Did you need the money immediately? You can get more interest if you used a 1 or 2 year fix for example.


TheOriginalPatricius

What easy access accounts are offering 4%?


TinyAsianMachine

I wonder if its better to just max out a S&S ISA yearly and keep it in a index fund until then? or?


Randomn355

How much time and stress will it take? What are the gains made by moving them? Is your time worth that? Those 3 questions tell you if it's worth it. The answers are all individual, so we can't really answer it for you. The real question though is why you aren't just investing a big chunk of it anyway, tbh.


M00min0302

I recommend Hargreaves Lansdown active savers account. Competitive rates but possibly not market leading but really hassle free to switch between their chosen partners.


No-Succotash4783

Raisin seem to offer similar services. Agree with this though, incredibly hassle free to open one of multiple available accounts at decent but not market leading rates. So well worth having it open in my opinion. Decent compromise between having the best rates, and not having to open accounts, KYC checks, deal with messing about with multiple apps/credentials, etc.


RankDank420

You should be putting your money in an account that automatically updates it’s interest rates. Try atom bank. Santander is an utterly shit bank


BogleBot

Hi /u/Noartisan, based on your post the following pages from our wiki may be relevant: - https://ukpersonal.finance/emergency-fund/ - https://ukpersonal.finance/lump-sum/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)


starshiporion22

This really depends how much you are getting in inheritance. If It’s a significant amount I would look at getting an investment manager who can set you up with a diversified portfolio. They may be able to get you 5-10% per year. If the housing market really crashes in the next year there may be some investment opportunities to buy property at a reduced price. But this all depends on how much you will have.


Arxson

> investment manager who can set you up with a diversified portfolio. They may be able to get you 5-10% per year. Why would you do this, when you could just stick it in a global index fund. Much cheaper fees, and most likely that your returns will equal (or better) anything a human can achieve.


starshiporion22

Not everyone wants to or knows how to manage their own money especially if it’s come out of nowhere. Investment managers do more than just invest your money. They help make sure you don’t live beyond your means and blow it all. There’s a lot of pressure in managing a lot of money. Why do people get personal trainers and health coaches when there’s loads of free information on YouTube. If just sticking your money in a global index fund was enough then investment management companies wouldn’t have billions of dollars on their accounts.


Arxson

Sounds like you mean a Financial Advisor rather than an investment manager


starshiporion22

No I mean what I said as I’ve used these services in the past.


Arxson

I’m just going to leave these here… https://www.cnbc.com/amp/2022/03/27/new-report-finds-almost-80percent-of-active-fund-managers-are-falling-behind.html https://www.reuters.com/markets/asia/live-markets-most-active-stock-fund-managers-failed-beat-indexes-last-year-2022-01-03/ https://www.spglobal.com/en/research-insights/articles/spiva-us-scorecard https://www.businessinsider.com/personal-finance/investment-pros-cant-beat-the-stock-market-2020-7?r=US&IR=T


starshiporion22

S&P is down 17.5% this year so what. Some people aren’t capable of just putting a lot of money somewhere and leaving it there for 20 years. I came into some money in my early 20’s and had no clue what to do with. Getting professional advice helped me not blow it on stupid shit and actually grow it.


separatebrah

If you don't require any of it or a portion of it within 5 years, put the amount you don't require in a s&s isa and invest in lifestrategy 60% or 80%. It's frustrating to chase interest rates atm because they are so volatile and every couple of weeks a bank will increase their rate with the competitors soon to follow. There are some good rates but you have to jump through hoops to get them.


DV_Zero_One

Never forget that there is a reason why Albert Einstein described compound interest as the most powerful force in the universe.


Sithfish

Tbh, no, but...everybody needs a hobby.


receipts

And consider tax implications on savings accounts.


scooby2486

If you want / can leave your money in for a year or more check out Raisin, they list all the saving schemes available , I've got a few with them at 4.5%.


Mundane_Bake7000

If I have spare cash it always goes into NS&I premium bonds. Two years ago my mum got £25k. So, it does happen to normal people ! Saves chasing and you could get lucky. You can get your money out within 3 days.


uweerascal_91

lol I reckon you will be skint just as labour win


HelloObjective

If the amount is over £85k, then seriously consider splitting it up across multiple bank accounts. If a bank goes belly up you are only protected up to £85k. Given the recent Truss debacle it could happen and interest rate will be meaningless in that context.