I was thinking of opening a new savings account with a higher interest rate 
than my present account to put my excess balance as I get paid weekly, then 
transferring it back when needed to pay my monthly bills but then I got to 
thinking.

At present transferring between accounts is instantaneous but if I open a 
new savings account it will take min 3 days to get to it and when I transfer 
it back another 3 days, so I will lose 6 days interest a month which is 72 
days a year.

Which if my calculations are correct equals a loss of 20% on the new 
interest rate, so if I was getting 3.5% I would only be getting the 
equivalent of 2.9% before tax.

Am I correct in my thinking?

Thanks, Dave

Dave wrote:

> I was thinking of opening a new savings account with a higher interest
> rate than my present account to put my excess balance as I get paid
> weekly, then transferring it back when needed to pay my monthly bills but
> then I got to thinking.
> 
> At present transferring between accounts is instantaneous but if I open a
> new savings account it will take min 3 days to get to it and when I
> transfer it back another 3 days, so I will lose 6 days interest a month

Indeed.

> which is 72 days a year.

No it isn't.

> Which if my calculations are correct equals a loss of 20% on the new
> interest rate, so if I was getting 3.5% I would only be getting the
> equivalent of 2.9% before tax.
> 
> Am I correct in my thinking?

No, it's actually twice as bad.

Each pound you deposit and later withdraw loses 3 days on the way in
and three days on the way out.  Each such pound withdrawn monthly would
have spent on average half a month earning interest between the moments
of transfer-in and transfer-out if these transfers had been instantaneous.
That's 15.2 days.  But if every pound loses 6 days, then the average
pound only earns for 9.2 days and this means that you lose almost 40%
of the interest.

But this is a worst case result which applies only if the account is
completely zeroed out each month.  If any money stays in there long
term, the effective interest rate won't be quite so low.

Any money you cycle yearly would have spent an average 182.5 days
earning without delays and 176.5 days with delays, so the delay
would only lose you some 3.3% of the interest.


If your two banks have branches you can visit, you can avoid the 3 day
delays by withdrawing and depositing the money in cash over the counter.

One solution to your concern is to open a current account and a savings 
account in the same institution which allows instant online transfers 
between accounts.

"Dave"  wrote in message 
news:TscIm.1554$Ym4.1023@text.news.virginmedia.com...
|I was thinking of opening a new savings account with a higher interest rate
| than my present account to put my excess balance as I get paid weekly, 
then
| transferring it back when needed to pay my monthly bills but then I got to
| thinking.
|
| At present transferring between accounts is instantaneous but if I open a
| new savings account it will take min 3 days to get to it and when I 
transfer
| it back another 3 days, so I will lose 6 days interest a month which is 72
| days a year.
|
| Which if my calculations are correct equals a loss of 20% on the new
| interest rate, so if I was getting 3.5% I would only be getting the
| equivalent of 2.9% before tax.
|
| Am I correct in my thinking?
|
| Thanks, Dave
|
|

'Dave[_7_ Wrote: 
> ;93912']I was thinking of opening a new savings account with a higher
> interest rate 
> than my present account to put my excess balance as I get paid weekly,
> then 
> transferring it back when needed to pay my monthly bills but then I got
> to 
> thinking.
> 
> At present transferring between accounts is instantaneous but if I open
> a 
> new savings account it will take min 3 days to get to it and when I
> transfer 
> it back another 3 days, so I will lose 6 days interest a month which is
> 72 
> days a year.
> 
> Which if my calculations are correct equals a loss of 20% on the new 
> interest rate, so if I was getting 3.5% I would only be getting the 
> equivalent of 2.9% before tax.
> 
> Am I correct in my thinking?
> 
> Thanks, Dave

Yes you are absolutely right. These activities just make us frustrated.
i have also gone through such experiences.




-- 
Andrew Jones