Best Holding Account

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Outsider_83
Outsider_83 Posts: 166 Forumite
in Budgeting & bank accounts
Hi All,

I've been researching a good holding account where I could keep several thousand before feeding to regular savers etc and the best I can find is Tesco at 3% - can anyone recommend a better account?
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  • 18cc
    18cc Posts: 2,120 Forumite
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    Please could you define what you mean by 'several'
  • Zanderman
    Zanderman Posts: 4,684 Forumite
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    Outsider_83 wrote: »
    Hi All,

    I've been researching a good holding account where I could keep several thousand before feeding to regular savers etc and the best I can find is Tesco at 3% - can anyone recommend a better account?

    Tesco's balance limit (for the 3%) is just £3k so you can't keep much in there actually earning interest. Other accounts with high interest (eg Nationwide FlexDirect at 5%) have similar limits (in Nwide's case £2.5k).

    So if you want a feeder account to feed several thousand out to regular savers these accounts will only be of limited use. Indeed at 3%-5% you may be best leaving the money there - regular savers, even the best ones at 5% per annum (pro rata) will only give returns of (roughly equivalent) 2.6% on the overall balance (5% interest per annum but most of the cash isn't there for the whole annum!)

    The obvious feeder account, in my view, is Santander 123, which pays 1.5% on up to £20k. You gain interest at 1.5% whilst in the 123 account and 5% per annum (if that's your reg saver rate) whilst in the reg saver. But 123 has a monthly charge which can be off-putting, unless you cover that with cashback on DDs from the account.
  • Outsider_83
    Outsider_83 Posts: 166 Forumite
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    Interesting points.


    Next month I will have two regular saver accounts (Nationwide and First Direct) expire, they currently feed from my Nationwide Flex direct account (5%) which is due to revert to 1% so need to better thing. The value of my regular savers is £5k in total, however with my salary going into my main account each month I will have more money to play with.
  • Outsider_83
    Outsider_83 Posts: 166 Forumite
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    Just one last post to double check that Tesco is my best holding account?
  • colsten
    colsten Posts: 17,597 Forumite
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    Outsider_83 wrote: »
    Just one last post to double check that Tesco is my best holding account?
    If your question is whether Tesco current accounts currently pay the best interest after Nationwide FlexDirect, the answer is yes, provided you are meeting the conditions for getting interest paid. As already mentioned, Tesco limit is £3K for interest purposes.
  • Outsider_83
    Outsider_83 Posts: 166 Forumite
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    The only requirement I thought Tesco had was interest would only be paid on balances of £3k.

    As for Nationwide my 5% flex direct account is expiring.
  • northwalesd
    northwalesd Posts: 1,168 Forumite
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    Outsider_83 wrote: »
    The only requirement I thought Tesco had was interest would only be paid on balances of £3k.

    As for Nationwide my 5% flex direct account is expiring.

    From the Tesco current account T&Cs
    Credit interest guarantee terms and conditions
    3% AER/2.96% Gross variable credit interest on balances up to £3,000, guaranteed until 1 April 2019. To earn interest, each statement month you must pay in at least £750 and have at least three direct debits paid from your account (excluding direct debits to a Tesco Bank savings account). Although this rate is variable it will not drop below 3% AER during the guarantee period, provided you meet the interest conditions. Interest paid monthly.
  • Outsider_83
    Outsider_83 Posts: 166 Forumite
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    Tesco looks a bit messier than I imagined and may not be a viable option. Is there anything else?
  • eskbanker
    eskbanker Posts: 31,076 Forumite
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    Outsider_83 wrote: »
    Tesco looks a bit messier than I imagined and may not be a viable option. Is there anything else?
    In order to benefit from (relatively) decent interest rates from current accounts, the quid pro quo is that these typically need a few direct debits to be paid out of them and also a minimum monthly amount paid in, i.e. the typical use of a 'main' current account.

    If you're unable or unwilling to jump through these hoops then that essentially leaves traditional savings accounts and lower interest rates, see https://www.moneysavingexpert.com/savings/savings-accounts-best-interest for further details....
  • Outsider_83
    Outsider_83 Posts: 166 Forumite
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    Is it possible to renew the Nationwide account for another 12 months at 5%?
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