Parent Saver Account AIB

OrlaM

Registered User
Messages
9
Hi,
I'm looking for advice regarding AIB parent saver accounts I have for my two children.

the format is that I lodge the CB of €140 p/m into the parent saver account.
This account earns 3.75% interest
At the end of the year of saving, the balance is transferred into the corresponding deposit account earning 1% interest.

My Daughter's birthday is in March so today the lump was transferred to the deposit account.
My online access only allowed for transactions back to the previous September to be visible. As I could see no interest added - I rang AIB and they informed me that interest is calculated daily but added in April.

I asked the questions:The fact that my balance reverts to zero in March - does this not affect interest earned?
And is only one payment subject to interest?

I was told that it didn't as the interest is calculated daily so from next April I should see the interest added from the previous year even though my account emptied in March.

Still doesn't this affect the cumulative compound interest????

I then asked what the interest earned in the previous year. It was €42.12 before DIRT and €31.08 after DIRT.

This was based on savings from April 10 to April 11.

My lodgements have always been in line with the CB payment. I wonder was it €160 in that timeframe.

Anyway based on €140 and 3.75% I found an interest calculator on monthly installments online that suggested that the interest should be €68. I thought that €48 sounded low.

Does this all seem right or am I being penalised for emptying the account in March?

Many thanks,
ORla
 
Generally, intrerest accrues daily and compounds untill pay date.

AIB changed the rate on this account several times during the year. You need to factor this in.

The formula would be:
Month 1: [€140] * [RATE] * [1/12] * [0.70] +
Month 2: [€140+€140] * [RATE] * [1/12] * [0.70] +
Month 3: [€140+€140+€140] * [RATE] * [1/12] * [0.70] + etc etc etc

You need to factor in the period when balance was zero as well.

It is unlikely that AIB calculated the interest incorrectly.
 
If the account was emptied in March 2010, then you would have 'lost' one months interest, so you wouldn't be looking at a full 12 months interest. Essentially, there would be no Month 12 in CiaranTs list above, or if there was then it would be interest on €140 and not on €1,500+

I've recently set up one of these accounts and the blurb indicates that every 12 months the account is cleared out and the balance transferred to a lower interest account - I think it pays 1%.

It sure beats the 0.01% I was getting on my equivalent account with BoI. There's a maximum of €200 per month per account, but you can set up 2 parent saver accounts and transfer in €140 to each. As far as I remember there's no restriction on withdrawals from the regular saver account, but I'm pretty sure there's none on withdrawls from the lump sum account that the balance is transferred to.

z
 
There are far better options for regular saver accounts than the AIB Parent Saver as per the best buy thread.
 
I have two of these,I was advised at the time of opening the the time of month the money is transferred will effect the interest. To maximise the interest, the money should transfer as close as possible to the start of the month.
 
Interest Calculation

Month 1: [€140] * [RATE] * [1/12] * [0.70] +
Month 2: [€140+€140] * [RATE] * [1/12] * [0.70] +
Month 3: [€140+€140+€140] * [RATE] * [1/12] * [0.70] + etc etc etc


Thanks for the information everyone posted.

I thought the formula for interest was quite interesting as I would have thought month 2 would have included as a principle the deposit as well as interest accrued from the previous month.: [€140+€140 + Interest accrued from Month 1] * [RATE] * [1/12] * [0.70] +

This was my understanding of compound interest.

I think I will consider other options for these regular savings that would not be emptied on an annual basis

Many thanks again,
Orla
 
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