MSE News: Should I save in Santander's 123 account or put the money in a cash ISA?

Former_MSE_Helen · 16 February 2015 at 4:24PM

ISA season is nearly upon us, so should you open one? Or should you save in an interest paying bank account instead?...

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Should I save in Santander's 123 account or put the money in a cash ISA?

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Archi_Bald · 16 February 2015 at 4:48PM

Errors in article:

Additionally, with Santander you will need to pay in an income of £500 each month to keep the account – for most people this just means ensuring your salary is paid in there – and you'll also need to have at least two direct debits/standing orders coming from it.

Standing orders are irrelevant as only DDs will ensure that interest (and cashback) is paid.

Might be easier to refer to the 1|2|3 Current Account Key Facts Document?

For really big savers – those with more than £35,000 –.....The real decision comes for those with less than £35,000

- is this meant to read £15,000? If not, do you mean £50,000? Or £65,000? As it is possible to get £50K into interest paying [sole] current accounts that pay at least the same or better than the 123.

Broonies123 · 16 February 2015 at 7:54PM

You say people with over £35k are ok because there is enough to max ISA and £20k limit in Santander, however I believe an individual can have up to 6 Santader 123 accounts. I would only invest up to the £80k (?) limit the government covers if the bank/building society goes bust but presumable if you have over £35k it would be better to open more than one Santander account?

I believe you need to pay in £500 a month but in theory you could set up transfers between accounts (even if that is using an account at another bank) but setting up 2 direct debits could be an issue (I believe these have to be to an organisation as oppose to between accounts).

colsten · 16 February 2015 at 8:04PM

Broonies123 wrote: »

I believe an individual can have up to 6 Santader 123 accounts

How do you get round the Santander 123 T&Cs that say you can have max 1 sole and one joint 123 account? Is it moral to bypass T&Cs?

Broonies123 · 16 February 2015 at 8:07PM

When I called Santander (granted before Christmas so they may have changed the t's. & c.'s they informed me each individual can open up to 6 Santader 123 accounts.

Was about to call to go ahead with this but by the sounds of it we will need to rethink!

Jonbvn · 16 February 2015 at 8:52PM

Broonies123 wrote: »

When I called Santander (granted before Christmas so they may have changed the t's. & c.'s they informed me each individual can open up to 6 Santader 123 accounts.

Was about to call to go ahead with this but by the sounds of it we will need to rethink!

How would you deal with the dd's from 6 accounts????

colsten · 16 February 2015 at 9:18PM

Jonbvn wrote: »

How would you deal with the dd's from 6 accounts????

That's easy enough to do but I don't think you could get 6 123 accounts to start with.

Not that you would want to have 6 x £20,000 in a single financial institution.

ceredigion · 16 February 2015 at 9:41PM

Let's say you take £20,000 out of your old ISAs – if you wanted to get it back in at some stage in the future, with current ISA limits, it would take you two years. So if you're planning on doing that, do really weigh up whether the short-term gain is worth it.

No it doesn't MR Lewis. At the very most you can only ever be 366 days between two ISA deposits . One year and one day. :money:

MSE_Martin · 16 February 2015 at 11:01PM

Archi_Bald wrote: »

Errors in article:

Standing orders are irrelevant as only DDs will ensure that interest (and cashback) is paid.

Might be easier to refer to the 1|2|3 Current Account Key Facts Document?

- is this meant to read £15,000? If not, do you mean £50,000? Or £65,000? As it is possible to get £50K into interest paying [sole] current accounts that pay at least the same or better than the 123.

You're quite right about the standing orders - I've tweaked it.

As for the next bit it is £35,000 - as I make clear in the story Im referring to Santander 123.

Yes of course if in a couple you could open a joint Santander as well - plus you could do a direct debit roll around as explained in the 5% savings loophole guide I link to - but this piece is to explain the simple logic behind the choice. It can't do every single option hence linking to it. The aim is to give people who are asking, some of whom are nervous even about ISAs a broad guide to understanding concepts.

ceredigion · 16 February 2015 at 11:19PM

MSE_Martin wrote: »

You're quite right about the standing orders - I've tweaked it.

As for the next bit it is £35,000 - as I make clear in the story Im referring to Santander 123.

Yes of course if in a couple you could open a joint Santander as well - plus you could do a direct debit roll around as explained in the 5% savings loophole guide I link to - but this piece is to explain the simple logic behind the choice. It can't do every single option hence linking to it. The aim is to give people who are asking, some of whom are nervous even about ISAs a broad guide to understanding concepts.

Standing orders:p

bowlhead99 · 17 February 2015 at 1:38AM

ceredigion wrote: »

No it doesn't MR Lewis. At the very most you can only ever be 366 days between two ISA deposits . One year and one day. :money:

Let's say I don't have any ISA allowance for 2014/15 left and I've taken £20k out of my ISA to invest in Santander 123 after hearing about this perfectly sensible way to maximise my interest income. But then after a while I have a change of heart because their offer terminates, or becomes less attractive when I become a high rate taxpayer, or a relatively better cash ISA offer comes along, or I want to use the money to invest efficiently in S&S etc etc.

When can I get all the money wrapped up again? Well, I can put the first bit back in the wrapper on 6 April 2015. Then I can put the rest of it in the wrapper on 6 April 2016. That's 366 days (leap year) between the two events although incidentally 6 Apr to 6 Apr is only a year, not "one year and one day", but let's not split hairs.

But 6 April 2016 is certainly more than 366 days from NOW when I actually want to put my assets back into a tax wrapper if I was allowed. I have to wait for the new tax year to come around to even start the process, then wait for the next one to come around to complete it. So, 366 days might be the minimum I have to wait in a leap year, if I already have a full year ISA allowance ready and waiting to start the process right this minute; but it is not at all the "very most" I might have to wait to get it all done. I might have to wait 700 days plus.

The article could be improved to keep the pedants happy with a very simple amendment:

Let's say you take £20,000 out of your old ISAs – if you wanted to get it back in at some stage in the future, with current ISA limits, it would take you two years. So if you're planning on doing that, do really weigh up whether the short-term gain is worth it.

changed to:

Let's say you take £20,000 out of your old ISAs – if you wanted to get it back in at some stage in the future, with current ISA limits, it could take you two years. So if you're planning on doing that, do really weigh up whether the short-term gain is worth it.

MSE News: Should I save in Santander's 123 account or put the money in a cash ISA?

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