Savings account or better option?

r.mac_2

Hi, I am looking for a push in the right direction please.

I have approx £4000. I will be spending half in January 2007 and half in March 2007. I don't want to touch this money until then. My idea was to put it in a savings account. Is this the best thing to do? I want to earn as much interest as possible.;)

other points which may have a bearing:
I am a student, so don't have to worry about tax (i think).
i have the money in a lump sum now
i have no ISA's or anything - just a rubbish rate instant access attached to my current account.

Any advice greatfully recieved.

EagerLearner

An ISA is the best option as it's tax free - check Martin's ISA Best Buys - you can open with £1 and most are easy access. If you want it to be far far away from temptation, open with a non-internet non-telephone banking bank or building society ;o) I opened mine with Bradford & Bingley 1 week ago but you may get slightly better rates now.

You will see that other posts mention various regular saver accounts at 8% now, but I think you would have to drip feed your money into them. Given that you want to withdraw 50% in 6 months time, I'd say an ISA is best as you can start earning interest on the lump sum now.

EagerLearner

Mr_Mumble

Don't see the point in an ISA for the OP since they're a non-taxpayer and will be taking the money out this year - which also rules out a regular saver.

The best paying saving accounts at the moment are probably ICICI (5.15%) and Bradford and Bingley e-savings (4.85%).

Make sure to fill in a R85 form to get the interest paid in full. 20% of the interest is taken by G.Brown if you don't!

Sillychuckie

I disagree.
The 8% Lloyds TSB regular saver is ideal.
If you start drip feeding it now, you will still get more interest ouf of it than any ISA. There is no point in using an ISA since you are gonna be withdrawing the money eventually anyway.

You can close the Lloyds TSB regular saver when you need to, and withdraw from it when you need to (without losing interest).
Your only penalty is that you will not be able to open a new one until after your 2 year term has passed (but I doubt this would bother you).
Look into it.

Use a standard saver as Mr Mumble suggested for the rest, but only to dripfeed the regular saver.

zzzLazyDaisy

Coventry building society is paying 5.1% on its current account and savings account. So for easy access when needed combined with a good interest rate, it is hard to beat. OP should sign the tax exemption form (soz can't remember the name)

http://www.coventrybuildingsociety.co.uk/