How to make the best of a lump sum over a very short period?

Parm

Hi all,

I've been given a gift of a lump sum of money to put toward a house I'm buying.

The cheque will have cleared this Friday, but I most probably won't be making the purchase for a further 5-6 weeks.

I don't currently have a savings account other than an Egg ISA, and of course keeping this lump sum in my standard account will be wasteful as I won't be earning the interest that I could.

So, what should I do with it? I'm not familiar with savings accounts, and I've never had a lump sum of this size before. I'm guessing I should open a high-interest savings account, put the money into that, earn a month's interest, and then remove the required amount...?

However, will I be able to move the money around so quickly? Once the house has been purchased, I don't envisage continuing to top up any such savings account - though, I may empty my ISA into it on an annual basis.

Any help, advice and suggestions on what I could do to make the most of the money would be very much appreciated.

Thanks in advance!

debbie42

Setting up a savings account is normally fairly quick and easy. 6% + is available without too much bother, in fact, I think Egg have one? Who is your current account with? Check if they have a decent account as that would be a good one to link and transfer money.

As to transfers, an electronic BACS transfer takes a few days. Some now offer faster payments (FP), which are almost immediate to some other accounts. You should nknow well enough in advance where and when the money is to go to work out the best way of handling this.

Just wondering, why would you empty an ISA into an ordinary savings account? You'd lose the tax benefits then.

freddysmith

I would go for an account that pays interest monthly then when it was time to withdraw the money you would not have to close the account or wait until it pays out on the annual interest date.

You could have a look at these websites to give you help searching for a good No Notice savings account

http://www.moneyfacts.co.uk/default.aspx

http://www.thisismoney.co.uk/saving

Parm

Thanks for the suggestions!

debbie42 wrote: »

Setting up a savings account is normally fairly quick and easy. 6% + is available without too much bother, in fact, I think Egg have one?

Debbie, I've just checked and Egg do have a savings account. It offers 6.30% gross pa/AER for 12 months. However, it does say that it's a limited offer for new accounts only. I can't tell if it means new savings accounts, or new Egg customers.

Looks like a decent option though!

debbie42 wrote: »

Just wondering, why would you empty an ISA into an ordinary savings account? You'd lose the tax benefits then.

I thought the ISA could hold up to £3,600 max. But I think I'm wrong, seems it can hold as much as you like, but that's the max amount you can put in each year. I'm learning!

freddysmith, I've had a look at the Egg Savings FAQs and it does say you can choose for interest payments to be monthly or annualy. It doesn't, however, tell you if the interest rate would be the same.