Bamboozled with choices

studly

Hi;
I've been reading the forums a little and i'm totaly stuck at the mo as anything to do with fininacial stuff just doesn't sink in when i trawl the net etc lol. Basicaly i have a spare £3000, i know it's not a fortune but what would be the best option of maximising the interest and i'm not bothered about locking it up somewhere and having no access for a year or maybe 2.

Regards studlypoo

Milarky

The easiest thing is to apply for a fixed rate term account (with a term of one year - or two) often called a 'bond'. Do you have your £3000 deposited in one place yet, or is it spread around, because obviously putting in one account is the very first step to doing the above.

Alternatively, for £3000 you can probably boost the effective rate by applying for a regular savings account which allows a certain amount to be deposited each month, and often pays a higher fixed rate than most 'bonds' (e.g 5% for 12 months reg savings with Halifax, £25-£500 per month) Don't worry if the monthly amounts are greater than you can maintain either.. because many accounts allow you to vary the amount you pay anyway (e.g with the Halifax account and £3000 you could pay £500 for the first five months =£2500, then £350 for one month =£2850, and then £25 for the remaining six months = £3000 total. This gives you a higher average balance in the account than just sticking to 12 payments of £250 a month - and so you will earn slightly more interest doing this) With Regular savings accounts, however, you need to consider where you keep the money during the months before it is paid in. For this you need a suitable 'feeder account' - a pukka savings account, usually an online account, that pays a reasonable rate of interest in the meantime and also (importantly) allows you to set up or make the monthly payments to the regular savings account. For example, Egg are offering an account with a 12 months bonus rate - currently @ 3.35%. You can login in and make payments to Halifax from this once a month. This is only one example- there are many more online savings accounts offering the same facilities.

studly

Hi and thanks for the reply Basicaly i have a high interest c/account with the halifax which is currently 1.5% on balances upto £2500 and that is where the cash is currently residing. So if i understand this correctly i could open a halifax regular saver account at 5% aer fixed for a year and setup a standing order to "feed" that account with the monthly payments you have suggested. Now seeing as my c/account only offers 1.5% i now see it makes sense to open a better "feeder" account ie the egg one for instance. Your reply has made quite a bit of sense as i was confused with all the choices ie isa/savings etc