Cahoot Savings account dilemma

chris.hewson

Martin, some weeks ago you recommended Cahoot Savings Account as a good choice for saving lump sums. I can no longer find the article, but I did set up an account just before their special offer ended, which gave a “high” interest rate of 5.85% for the first £49,999.



I am now puzzled how I can benefit from this “high” interest account, as any transfer into the account has to be by some form of bank transfer, which takes time and therefore costs in loss of interest. The biggest problem of all appears to be how to get your money out of the account. One or two ways are suggested by Cahoot, but they appear to either charge for the privilege or take a long time, thereby losing interest.



I currently have the money in a Nationwide e-savings account, earning 5%.



Can you please advise on the best course of action? Do I leave it in the Nationwide e-savings, or will there be some benefit in transferring into the Cahoot account?



Regards



Chris Hewson

Milarky

Chris,

From Nationwide you transfer funds by direct debit, which is collected by cahoot and credited on the date of the 'transfer'. Thus you lose no interest* on paying-in.

To pay out of your cahoot account you have two options [having an 'external' bank account to work with]

Option 1: Request a BACS transfer to Nationwide Flexacount. Should take from Monday to Thursday - if requested before deadline of 4pm and not at the weekend

Option 2: Set up a 'third party' payment [again via BACS] to leave the cahoot a/c either on the same date or a certain futute date.

Both withdrawal options do involve loss of interest [unlike the paying in] but if the purpose of the withdrawal is to pay a bill [eg credit card or whatever] then cahoot is at least as quick as using your flexaccount directly - and with flexaccount they still need one day to set up a new payee - whereas with cahoot you can create a payee immediately

Hope that helps

*Provided your Nationwide overdraft is large enough to accommodate any withdrawal, you can request a transfer that would take you overdrawn on the morning initially, as long as you went online to transfer the funds across from e-savings before then end of the day. Thus you may continue to earn interest at e-savings rates until the money appears at cahoot. Otherwise the 'safest' option is merely to transfer from e savings into flexaccount the day before and lose a bit of interest for one day only

Fatboy_NSS

Well if it's otherwise in a Nationwide account earning 5% then you'd lose 5.5p interest per £100 during a 4 day clearing cycle. The higher interest rate in the cahoot account means your money would earn 85p more interest per £100 per year than in the Nationwide.

In a nutshell: if you're keeping the money saved for more than 2 months then the cahoot rate is better.

deemy2004

Chris

It was 5.65%.

You can do online BACS transfers both to and from cahoot.

I.e. use halifax to transfer to cahoot
Use cahoot to transfer to halifax

yes you do lose 4 days or so interest.
What you need to do is work out the difference and see if it amounts to more than 4 days.

I.e. 5%/ 0.65% = 7.7 X 4 = 31days

SO it would take 31 days to recoup the 4 days of lost interest, after which you would be enjoying the extra 0.65%

So you need a minimum of 31 days left for the 5.65% to run for it to be worthwhile moving the money to cahoot.