Finance Choices
Barclays Regular Saver Account
Barclays is launching a market-leading ten per cent Regular Saver account tomorrow, as part of a re-vamp of its savings range.
The new Barclays Regular Saver account will offer customers a return of ten per cent gross/AER on savings of between £25 and £250 per month for a year after the account is opened.
Both new and existing customers can open the account, as long as they pay at least £1,000 into a Barclays current account every month - either through salary or pensions credit.
But this, added to the locked-in nature of the account, means the deal is slightly weaker than it first appears.
The maximum investment in the account is £3,000 - assuming the full £250 is paid in each month - the same as a cash mini-ISA. The difference is that money cannot be withdrawn from the Barclays' ten per cent Regular Saver account without sacrificing the ten per cent interest rate.
If people break the terms of the account (for example missing too many payments, or withdrawing money early) interest will be paid out at the same rate as Barclays' Easy Saver account - currently 2.96 per cent.
Additionally, while ISA's build up interest tax-free, the interest earned on the new Barclays account has tax charged on it - effectively reducing the amount of money earned from ten to around eight per cent.
The maximum amount people can earn from investing in the Barclays' Regular Saver, after tax, is £120 - assuming the full £3,000 is invested. By contrast, putting £3,000 into a top-rated cash mini-ISA can earn around £150.
Additionally, Barclays neither offers cashback on current account spending, nor charges a significant amount of interest on positive balances on current accounts. Nationwide, Smile, Cahoot, Lloyds TSB, and Alliance & Leicester all offer interest on positive balances of at least three per cent.
Additionally, several other providers are currently offering ten per cent returns.
People opening Alliance & Leicester Premier and Premier direct current accounts can receive both a ten per cent savings account, and five per cent interest on positive balances in their current account. Halifax offers a ten per cent savings account for children, while Bradford & Bingley also offer a ten per cent regular saver deal.
Overall, the high headline rate means that for existing Barclays customers with some spare cash to invest, the new Regular Saver account is a good deal. However, people switching accounts would earn more with Alliance & Leicester and people simply looking to put money away can get the same rate with Bradford & Bingley.
"There are millions of Barclays bank account customers paying in over £1,000 a month and such individuals that do not have the inclination to switch their current account elsewhere, should take advantage of this ten per cent rate," commented Stuart Glendinning, director of savings at price comparison website www.moneysupermarket.com.
The new Barclays Regular Saver account will offer customers a return of ten per cent gross/AER on savings of between £25 and £250 per month for a year after the account is opened.
Both new and existing customers can open the account, as long as they pay at least £1,000 into a Barclays current account every month - either through salary or pensions credit.
But this, added to the locked-in nature of the account, means the deal is slightly weaker than it first appears.
The maximum investment in the account is £3,000 - assuming the full £250 is paid in each month - the same as a cash mini-ISA. The difference is that money cannot be withdrawn from the Barclays' ten per cent Regular Saver account without sacrificing the ten per cent interest rate.
If people break the terms of the account (for example missing too many payments, or withdrawing money early) interest will be paid out at the same rate as Barclays' Easy Saver account - currently 2.96 per cent.
Additionally, while ISA's build up interest tax-free, the interest earned on the new Barclays account has tax charged on it - effectively reducing the amount of money earned from ten to around eight per cent.
The maximum amount people can earn from investing in the Barclays' Regular Saver, after tax, is £120 - assuming the full £3,000 is invested. By contrast, putting £3,000 into a top-rated cash mini-ISA can earn around £150.
Additionally, Barclays neither offers cashback on current account spending, nor charges a significant amount of interest on positive balances on current accounts. Nationwide, Smile, Cahoot, Lloyds TSB, and Alliance & Leicester all offer interest on positive balances of at least three per cent.
Additionally, several other providers are currently offering ten per cent returns.
People opening Alliance & Leicester Premier and Premier direct current accounts can receive both a ten per cent savings account, and five per cent interest on positive balances in their current account. Halifax offers a ten per cent savings account for children, while Bradford & Bingley also offer a ten per cent regular saver deal.
Overall, the high headline rate means that for existing Barclays customers with some spare cash to invest, the new Regular Saver account is a good deal. However, people switching accounts would earn more with Alliance & Leicester and people simply looking to put money away can get the same rate with Bradford & Bingley.
"There are millions of Barclays bank account customers paying in over £1,000 a month and such individuals that do not have the inclination to switch their current account elsewhere, should take advantage of this ten per cent rate," commented Stuart Glendinning, director of savings at price comparison website www.moneysupermarket.com.
posted by Barbara Gordon at 9:10 AM
Barclays Regular Saver Account
10 Comments:
Barclays is the latest bank to offer an account with a 10% interest rate ? but only for customers who have a linked current account, and only for a limited balance.
From tomorrow customers will be able to open a Regular Saver account which pays 10% interest, as long as a deposit of between £25 and £250 is made into the savings account each month.
There must also be a minimum £1000 salary or pension payment into a linked Barclays current account each month.
The account is similar to the 10% Alliance & Leicester Premier Direct Saver account, except that Barclays is offering its account to existing as well as new customers. And unlike A&L, there is no requirement to set up a regular savings plan.
But if savers do not transfer between £25 and £250 each month, or if they make a withdrawal from their savings account, the rate will drop to 3.6%.
The offer lasts for 12 months, after which the rate paid on the account will drop to 3.6%. The deal will only available until April 26.
Last week Bradford & Bingley also launched its 10% Christmas saver account with compulsory monthly payments of between £10 and £150, but the balance at the end of 12 months is restricted to £1,500. However, the biggest difference between this account and other 10% accounts is that it does not need to be linked to a current account.
Stuart Glendinning, director of savings at MoneySupermarket said: 'Customers should be aware that despite the compelling headline rate on the Barclays Regular Saver, they must also switch their current account to the bank.
'Although 10% is a great rate of interest it's hard to see Barclays attracting many new customers because their current account proposition is weak. Anyone thinking of switching should opt for the A&L Premier Direct current account which is the market leading current account and also comes with a 10% regular saver account.'
He added: 'A constant balance of £1000 in A&L's Premier Direct Current Account paying 5.00% and the maximum £250 invested each month into the 10% Regular Saver account for a year, means that £213.66 interest will be earned over this period.
'With a constant balance of £1000 in the Barclays Bank Account paying 0.1% and similarly the maximum £250 invested into the 10% Regular Saver, means £163.50 interest is earned. This means more interest of £50.16 with A&L.'
From tomorrow Barclays will also increase the rate offered on its children's saving account to 4.07% to 2.52% on balances between £1-£50.
The group has also launched an instant access Easy Saver account which will pay 3% interest on sums over £1 and a Bonus Saver, which pays 3.6% on balances of £5,000, rising to 4.11% on ones of £100,000, including a 1.5% annual bonus that is paid proving no withdrawals are made.
The bank has already banned pens on chains from its branches and renamed ATMs 'holes in the wall' in a bid to make its branches more user-friendly.
Any account that encourages people to get into the habit of saving before they spend is worthwhile, especially one that focuses on saving for Christmas, which can be one of the most financially draining times of the year.
Banks are using these eye-catching rates as a way to attract more current account holders but they have imposed a number of restrictions on who can apply. The exception is the Bradford & Bingley account, which is available to anyone.
I think you will find that by transferring £1000 to barclays each month and back again (if they allow this) (loss of interest around 120 days at 5% is £16) then you will still be better off with this account over a standard 5% account. I will try some calculations later.
Right, if the £1000 must be your salary that puts the kibosh on it for those whose salary is committed elsewhere - if it isn't then have your salary paid in to barclays and automatically transferred out (less £250).
What would you do if you were self employed and pay yourself a salary?
Current account pays pants 0.1% interest. Unless you are a current Barclays customer and don' mind receiving 0.1% on your current account then this maybe worthwhile. Somehow I don't think Bruce will be recommending this regular savings account!
So, what I should do is:
1. open a Barclays current account and Regular Saver tomorrow;
2. have my salary paid in to my new Barclays current account (as opposed to my current A&L account);
3. set up a monthly payment of £250 into my Regular Saver from my Barclays current account;
4. immediately on being paid my salary each month transfer all of it, less £250, into my A&L account.
Based on lippy's sums above, the loss of interest moving about £1,500 each month from Barclays to A&L would be around £21?
The only other thing is I seem to remember that the A&L Premier Direct 5.0% interest rate is dependent on a regular sum being paid in (£500/month according to A&L's website). Does that have to be a salary, or can it just be a transfer from another Bank (i.e. from Barclays as in 4)?
VERY annoyed at having to do this - if A&L had just made their own 10% Regular Saver available to CURRENT customers as opposed to NEW ones this would all be irrelevant!
No. The cost of moving £1500 per month depends on the number of days the transfer takes, i.e. how many days of lost interest the transfer entails. See also the BACS transfers thread.
In you case this would be:
(salary * 12) * p/100 * d/365
where
p A&L interest rate
d number of days the transfer takes
Example
(£1500 * 12) * 5/100 * 3/365 = £7.40
Just one question not answered on the Barclays site - is this regular savers account operated via its online banking service? i.e. can you see the account displayed alongside your c/a and esavings account?
I know you can adjust the standing order online from month to month.
Anon, I have just opened my account this morning and you can veiw the account online. It looks as though you can change your payemnts online too if you need to.
The first guy I spoke to this morning (possible from the indian call centre) didn't know anything about the account. I had to be transferred to the UK to set it up. Why can't the call centres all be in the UK. Make life much easier. I'm sure the banks make enough profit to cover the extra expense.
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