Northern Rock interest query

nelly123

Registered User
Messages
29
Hi there,

I am thinking of opening a savings account with Northern Rock but I have a few questions first please. When viewing the "Latest Rates" page on their website, I don't really understand the difference between the various rates displayed. For example, with the Demand Online (Annual) account, the gross % p.a. is 4%, after DIRT is 3.20% & CAR% is 4%.
In contrast, the Demand Online (Monthly) account has a gross % p.a. of 3.75%, after DIRT is 3% & CAR is 3.81%.
What exactly is the difference between the gross % p.a. & CAR%? It seems fairly clear that it's more beneficial to have interest paid yearly as opposed to monthly, but what exactly is CAR & how do they calculate this figure?
I would really appreciate any clarity on this issue. Thank you.
 
What exactly is the difference between the gross % p.a. & CAR%?
CAR is the real rate and the one that should be used when comparing rates and offerings from different institutions.
It seems fairly clear that it's more beneficial to have interest paid yearly as opposed to monthly, but what exactly is CAR & how do they calculate this figure?
From [broken link removed]:
Compound annual return (CAR)

A measure of the rate of return on a deposit or investment that provides a like-with-like comparison between alternatives. If there is €110 in an account a year after €100 was lodged in it the return in CAR terms has been 10%. That's assuming that interest has been credited in full and that no withdrawals or lodgements were made to the account.
 
Thanks for the response.
Is the NR savings account only for investing once-off lump sums or can you save regularly to these accounts? Can you setup a direct debit to save monthly amounts into the account or what is the usual procedure for contributing to the account?
When making withdrawals, can you transfer funds out to a savings account or do you need to open a current account and then transfer to this first? Thanks.
 
Is the NR savings account only for investing once-off lump sums or can you save regularly to these accounts?
Either.

Have you read the Financial Best Buys forum lists of lump sum and regular contribution savings accounts?
Can you setup a direct debit to save monthly amounts into the account or what is the usual procedure for contributing to the account?
DD or electronic transfer work anyway.
When making withdrawals, can you transfer funds out to a savings account or do you need to open a current account and then transfer to this first?
You can transfer to a nominated account with another institution or request a cheque for the proceeds.

All of this is detailed in the terms & conditions on their website!
 
You can save regularly to NR accounts, it's easy to transfer money into NR electronically each month, or else you can set up a DD.

You can transfer funds electronically from NR into a nominated account, savings or otherwise.

However, if you are planning on saving on a regular monthly basis, you may want to consider Anglo Irish Bank, Bank of Scotland or AIB, as they give better interest rates (6.0 - 6.34%) for monthly savings. There are plenty of recent posts on these savings accounts. Check the small print for withdrawal restrictions which may apply however.
 
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