£21,000 Santander 123 or split Accounts?

bettz
bettz Posts: 165 Forumite
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in Savings & investments
Hi I'm after some advice for a friend,she's currently saving for a deposit for a house and has £21,000 in a Natwest account and gets around £12 a month in interest :(

What would be the best option open a Santander 123 account and stick all the £20,000 in 3% interest per month £592 a year so would that net £49 a month?

Or split the money

4% Club Lloyds £5,000

5% 2 x Tsb Plus accounts £4,000

3% £12,000 in a santander 123 account?

Comments

  • Archi_Bald
    Archi_Bald Posts: 9,681 Forumite
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    Isn't it a simple question of maths? Plus Santander pay interest on £20K max.

    You also need to take 20% tax off the interest payments. But current accounts are the best places interest-wise at present.

    Don't forget FlexDirect, Halifax Reward, and may be also some monthly savers.
  • Littlemeezer
    Littlemeezer Posts: 19 Forumite
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    Has to be Santander, one of the best interest paying current accounts at this present time. £20,000 will earn you 2.4% after tax, that's at 3%. Paid monthly and they deduct the tax. Most of us have DD's and you only need two to open this account, even the £24 yearly fee still makes it worth having an account, and don't forget your cash backs. Over all a great account, for the time being at least.
  • anoncol
    anoncol Posts: 982 Forumite
    Is maths that hard?
  • colsten
    colsten Posts: 17,597 Forumite
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    Littlemeezer wrote: »
    Has to be Santander, one of the best interest paying current accounts at this present time.

    The best interest paying current accounts at this present time pay 4% and 5% and do not have a monthly fee / the fee can easily be avoided. There are also 3% accounts without a monthly fee / for which the monthly fee can easily be avoided. These accounts take over £30K between them.

    Granted, you need a number of them - but then you can't get interest in Santander for £21K so you needed at least one other account anyway. For somebody saving for a deposit, I would have thought every penny counts and it would be a bit silly to choose the account that pays the least of all the interest paying current accounts as their preferred account.
  • Eco_Miser
    Eco_Miser Posts: 4,708 Forumite
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    The TSB accounts pay 2% more than the Santander account, that's £80 a year (less a bit because the accounts are full therefore no compounding), and less £16 if basic rate tax is payable. So yes, split over many accounts.
    Eco Miser
    Saving money for well over half a century
  • Consumerist
    Consumerist Posts: 6,310 Forumite
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    edited 27 July 2014 at 12:35AM
    bettz wrote: »
    Hi I'm after some advice for a friend,she's currently saving for a deposit for a house and has £21,000 in a Natwest account and gets around £12 a month in interest
    According to my arithmetic that's £15 pm gross (£180 pa) interest on £21,000 which works out at about 0.85% gross pa. As already mentioned, that rate is easily beatable in other accounts.

    If your friend is saving for a mortgage, they might want to consider whether putting some of their savings with a potential mortgage lender might help to get the mortgage when the time comes.
    >:)Warning: In the kingdom of the blind, the one-eyed man is king.
  • planteria
    planteria Posts: 5,321 Forumite
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    it's just about the rates.
    fwiw i am maxing Nationwide FlexDirect for 5% on £2500.
    and then i use S123 for a larger chunk.
    and haven't bothered with Lloyds or TSB so far.
    but i have 8 personal current accounts already...don't really have a need to complicate things further:)
  • Archi_Bald
    Archi_Bald Posts: 9,681 Forumite
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    planteria wrote: »
    it's just about the rates.
    quite.

    planteria wrote: »
    and haven't bothered with Lloyds or TSB so far.

    So it isn't just about rates, after all? Ignoring any compounding, £10,000 in a 123 yields £296 before tax, whilst the same £10,000 in TSB and Lloyds yields £441 before tax. Would you walk past £145 in the street because it is too hard to bend down to pick it up?
    planteria wrote: »
    i have 8 personal current accounts already
    there are quite a few people on here who have more than twice that number
  • YorkshireBoy
    YorkshireBoy Posts: 31,541 Forumite
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    Archi_Bald wrote: »
    Ignoring any compounding, £10,000 in a 123 yields £296 before tax, whilst the same £10,000 in TSB and Lloyds yields £441 before tax.
    Agree with the gist of your post, but I make it £392.10 gross on £9K (the max you could get in a Club Lloyds and 2 x TSB Plus for interest earning purposes). :)
  • Archi_Bald
    Archi_Bald Posts: 9,681 Forumite
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    Oh my, I was getting a bit carried away there thinking TSB Plus is £2,500 each...must be the heat frying my brain :o

    Still a difference of £127.70 before tax on £9K.
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