# Savings account advice



## Nicholas (10 Jul 2015)

Hi there want to ask someone in the know. What does 1.25 % variable gross/AER mean? I was looking at the rabodirect notice savers 30 account. So say I invested 5000 in that account how much would I have after a year? Sorry but not familiar with interest rate and financial terminology. Which is currently the best savings account on the market? If someone could explain this in plain terms or plain English, I would really appreciate it. I have no intention of going near a tax/investment advisor nor invest in shares cos I don't understand any of it. Thanks


----------



## JohnJay (11 Jul 2015)

short answer - not a lot. about €62 before tax.

decent calculator here. http://www.thecalculatorsite.com/finance/calculators/savings-calculators.php


----------



## Nicholas (11 Jul 2015)

]
Hi there, I'm thinking what's the point of putting money into a savings account in that case rather than you current account?


----------



## Lightning (11 Jul 2015)

Nicholas said:


> what's the point of putting money into a savings account in that case rather than you current account?



1. Return. The majority of current accounts pay zero interest. You can earn up to 4.00% AER variable with a savings account. Yes, most returns are low but it is better to get small return rather than no return whatsoever.

2. Budgeting. It is easier to have a segregated savings account from a financial planning perspective.

3. Safety. A current account can be effected by a compromised debit card. A savings account cannot be effected in the same way.

4. It might be simpler and easier, to have a savings account, to prove a savings habit to a bank in the future if you apply for a mortgage.


----------



## IsleOfMan (11 Jul 2015)

Nicholas. I reinvested a largish lump sum of money in an An Post 3 year bond and it is maturing next week. The rate of interest that I got was 10% over the 3 years. At the time, 3 years ago, I was very disappointed in that rate because it had just matured from a previous 3 year term at a much higher rate. Now looking at reinvesting this sum again and I see that I can only get circa 2.5% over another 3 year term.
I had hoped that my interest might pay my property tax each year for me. This is not the case. I end up having to dip in to my capital each year to pay this tax. Interest returns mean different things to different people at different stages in their life. Ciaran's point 4 above is a very good point. If you can show a bank that you can save then you are also telling them that you can repay.


----------



## Nicholas (11 Jul 2015)

Hi ciaran and isleofman thanks for your replies. Isleofman you say that the interest rate you were offered was 10 percent. This seems massive. So if I had invested 5000 into that I would have accrued 500 at the end of the term. Ciaran points all make sense.  The money I have is from making profit from the sale of a property. Some of the money I will use for treating the kids and family on a holiday. Some will be used for clearing all existing debts like car loan. The range of options are vast and very confusing to someone not in the know.


----------



## Nicholas (11 Jul 2015)

Hi there looked at savings on the an post site I see for installment savings " save for 1 year leave for 5 years interest 7 percent,  aer 1.24 percent tax free". Just back to my original question if I put 5000 into that what would I earn after 1 year. More importantly how did you arrive at the calculation as this will enable me to understand what these numbers  mean on all the different  banks sites.  Like what is aer?


----------



## Lightning (11 Jul 2015)

Nicholas said:


> Isleofman you say that the interest rate you were offered was 10 percent. This seems massive.



Please use AER rather than gross it makes comparisons easier, clearer and fairer. 



Nicholas said:


> save for 1 year leave for 5 years interest 7 percent, aer 1.24 percent tax free". Just back to my original question if I put 5000 into that what would I earn after 1 year.



You will only get the 1.24% AER variable if you keep the account for the full 6 year term. A very long period of time. You only get a very small payment if you withdraw at the first anniversary. 



Nicholas said:


> Like what is aer?



From Money Facts ...



> The *Annual Equivalent Rate* is designed to make savings accounts easier to compare. The *AER* can show a truer rate than a Gross rate, as it takes into account more factors, and also assumes that you keep your money in a particular savings account for a year.



From Money Saving Expert ...



> The AER or Annual Equivalent Rate is the official rate for savings accounts, and is designed to allow easy comparisons as it's meant to smooth out the variances between accounts (it's the equivalent of the APR for debts).
> 
> The idea is it shows what you'd get over a year if you put money in the account and left it there. The alternative is the gross rate, which is the flat rate of interest that's actually paid.


----------



## noproblem (25 Aug 2015)

I hope I'm in the right forum to discuss this query.
I've just got off the phone to Ulster Bank and was asking them about their Special Interest Deposit Account. The person on the line gave me the following information. If I would like to invest up to €1000  per month until it reaches a total of €15,000 they will pay me 1.5% interest pa, anything over the €15k to €100k will earn 0.50% which will be added on to the 1.5% making a total of 2% pa. Interest to be paid in Oct each year. I explained to him that I thought the amount over €15k will earn only  0.5%, but he was adamant that the 2% total was correct. He couldn't send it to me by email, only over the phone, as they only do internal emails. Has anyone done this and is he correct in his advise to me?


----------



## noproblem (25 Aug 2015)

Just got confirmation from someone in the Bank who has phoned me to say I was given the wrong information. Everything is correct except that the 0.5%  is not added on to the 1.5%. It stands alone after the €15k amount is reached.


----------



## mct1 (4 Sep 2015)

Noproblem - Nationwide UK and KBC bank both give you much better rates than UB for regular savings. Take a look at the Best buy thread http://www.askaboutmoney.com/threads/regular-savings-accounts.20747/


----------

