Am I being utterly stupid keeping money in my current accnt ?

nudda

Hi all,

Been a lurker on MSE but thought I would get involved.

I currently hold all my salary in a current account. Is this being utterly stupid, as I could be earning interest on it? I want to be able to access the money when I like but also make interest on it when I am not using it ... Can someone please advise ?

Thanks

p.s: Happy new year to everyone !:beer:

novagirl

There are plenty of instant access savings accounts about

baby_fuzz

I've been lazy and taken out an easy-access savings account with the same bank as my current account. The rate is better than the current account, and I can transfer money in and out instantaneously.

chriswatts

Depends on who your current account is with and why you choose that bank, it may pay to move your current account to one that pays more than the typical 0.1% interest.

lcharm

You should only ever leave money in your current a/c to cover any payments and known expenses you have for that month otheriwse you'll start losing the value of your money. Find a good saving account on here that won't penalise you for withdrawing instantly, loads about but it's down to you to shop around!

nudda

thanks folks

i am with barclays at the moment.
I am TOTALLY new to this game, and have always thought it is too good to be true that if I move my money into an ISA I can earn interest on it but still use it like a normal current account (which the exception that some ISA accounts require certain sums to be deposited each month ?)

So, with that in mind ... could someone please direct me to some good (safe ... if there is such a thing) ISA's ... and possibly guides as to how one should start off ?

Many thanks !!

Lansdowne

A current account is for current spending. If you get paid a set salary monthly and your regular spending is less than this, then you should be moving the excess into a savings account.
Not sure what you mean by having an ISA and 'using it like a current account', if you do the above this will not arise.

innovate

nudda, read up about ISAs, there's a specific thread for those. Your max annual payment into a cash ISA is currently £3600.

nudda

Lansdowne wrote: »

Not sure what you mean by having an ISA and 'using it like a current account', if you do the above this will not arise.

Thanks.
What I meant by this was that I wont have any restriction on my money i.e I can take it out how much i want, when i want.

Are there any risks involved with putting money into ISA ? I have about 10G in my current account doing absolutely nothing ...

innovate

nudda, read up about ISAs, there's a specific thread for those. Your max annual payment into a cash ISA is currently £3600.

Also, there's a specific ISA section on the site: http://www.moneysavingexpert.com/savings/best-cash-isa

anniecave

I wouldn't keep lots of money in a current account anyway. Possibility it may get taken out fraudulently via someone cloning your debit card for example.

An ISA is a specific type of savings account, where the interest is paid income tax free. You can only pay a maximum of £3600 per tax year into an ISA, and you can withdraw the money, but you can't then pay the value you have withdrawn back in during the same tax year. So it's best to use an ISA for longer term savings.

For the rest of your money, I would just open an instant access savings account. Check carefully when looking for this, as a few say they are instant access, but then have resrictions on how many withdrawals you can make per year, or don't pay interest for a month if you do make a withdrawal.

So the instant access savings account you can then pay in and out as you see fit.

I personally budget and work out on a spreadsheet how much I will need in my current account, plus an extra £250 buffer, then transfer the rest out to my savings account each month. (or transfer money back in if I've had an expensive month or have lots of payments needing making).

There are some good comparison websites, example,
www.moneysupermarket.co.uk which are good for getting lists of what accounts are available. A warning though: - interest rates went down by 1% last month and I'm finding instances where that website is wrong, or where providers haven't yet put their rates down. (Best double checking on the actual providers website and clicking through to their interest rates to check when they were last updated. Rates changed I think around 5th December)

Enjoy your saving!