Using a high interest bank account for savings

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jardack
jardack Posts: 3 Newbie
in Savings & investments
Hi
I am in a position where I currently have circa £2.5k "spare" with no debt other than mortgage, potentially increasing over the next year and am debating where to keep it to generate the most interest.
I have had a look and most savings accounts pay paltry rates of interest, but there are bank accounts paying a higher rate (looking @ Nationwide) on the basis that you pay in > £1k per month.
I am not looking to change my bank account to Nationwide atm, but am thinking about opening an account with £2k and set up a month £1k dd in and out...
Does anyone know if this is likely to work?
Or any other suggestions?
Thanks
JD

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  • MallyGirl
    MallyGirl Posts: 6,626 Senior Ambassador
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    Yes lots of people do this sort of thing
    I’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
    & Credit Cards boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com.
    All views are my own and not the official line of MoneySavingExpert.
  • ValiantSon
    ValiantSon Posts: 2,586 Forumite
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    jardack wrote: »
    Hi
    I am in a position where I currently have circa £2.5k "spare" with no debt other than mortgage, potentially increasing over the next year and am debating where to keep it to generate the most interest.
    I have had a look and most savings accounts pay paltry rates of interest, but there are bank accounts paying a higher rate (looking @ Nationwide) on the basis that you pay in > £1k per month.
    I am not looking to change my bank account to Nationwide atm, but am thinking about opening an account with £2k and set up a month £1k dd in and out...
    Does anyone know if this is likely to work?
    Or any other suggestions?
    Thanks
    JD

    Yes, it will work perfectly.
  • YorkshireBoy
    YorkshireBoy Posts: 31,541 Forumite
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    jardack wrote: »
    set up a month £1k dd in and out...
    Does anyone know if this is likely to work?
    DDs aren't possible. You'd need to use SOs (standing orders).
  • Eco_Miser
    Eco_Miser Posts: 4,708 Forumite
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    Since it's a current account, and therefore instant access, I'd be putting as much as possible (up to £2500) in, and also taking advantage of the 5%, £25-£250 a month regular saver.
    Eco Miser
    Saving money for well over half a century
  • NoMore
    NoMore Posts: 1,085 Forumite
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    https://www.moneysavingexpert.com/banking/compare-best-bank-accounts#interest
  • jardack
    jardack Posts: 3 Newbie
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    Thanks all - I might look into transferring my account fully to take advantage of the interest rates.
  • jimjames
    jimjames Posts: 17,621 Forumite
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    jardack wrote: »
    Thanks all - I might look into transferring my account fully to take advantage of the interest rates.

    Problem is if you transfer your main account you might not be able to fully take advantage of the rates. Or you may be able to do so, really depends how much money you have and if you want savings separate.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • G_M
    G_M Posts: 51,977 Forumite
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    jardack wrote: »
    Thanks all - I might look into transferring my account fully to take advantage of the interest rates.
    If you do that, your balance will vary as time passes (salary goes in, spending comes out), so will sometimes exceed the £2500 limit on interest and sometimes not reach the limit.

    To max the benefit, keep exactly £2500 in troughout the month and use a different account as your main one.
  • Eco_Miser
    Eco_Miser Posts: 4,708 Forumite
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    jardack wrote: »
    Thanks all - I might look into transferring my account fully to take advantage of the interest rates.
    I don't see the connection there, and you may sometimes need an account with a different bank to ensure you can pay in the £1000.

    Afterthought: Do you mean you don't expect to have £2500 cash for most of the month, so having just the one account ensures that all your money get the 5%?
    Eco Miser
    Saving money for well over half a century
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