Multiple regular saving accounts?

poppiestar

Hi everyone, first post and all...

I've been following this site for a while and taken its advice rather slowly, but I'm finally taking today out to sort things out a little better.

My first question: does it make sense to have more than one regular savings account?

I have no debts, I have my salary paid into my main account and I have an e-ISA that is already maxed out. I don't have any other savings accounts, so this is my next step. The site is recommending I get a regular savings account, and then a standard savings account after that.

At the moment, the current recommended is the Northern Rock 5%, but I can only deposit £250 a month into that one. I can (and want to) put away a lot more than that a month, so would it be better to get a second regular savings account (which is the Principality 4% according to the site) and deposit the maximum amount into that as well?

Does anyone have any recommendations? I'm a little confused about this. Many thanks in advance!

anna42hmr

i personally have had multiple reg savers at any one time, often because i was paying more a month than the allowances and also had them to mature at different times, or accounts for certain reasons (ie the only reg saver i have at the moment is the skipton christmas saver account, for me to put a set amount each month towards xmas presents etc)

i have previously had reg savers with lloyds, halifax and barclays which have all matured now, but have not opened any more as the rates on most are not brilliant at the moment compared to what i had (ie 7.49 % for barclays,etc)

ctdctd

Northern Rock one has been pulled so you are left with the 4% ones at the moment.
Up to you if you think it's worth the admin - £500 PM into a 4% regular saver fed from a 3% instant access account will give you at best £26 extra compared to leaving in the 3% account all year.

poppiestar

I've just noticed the Northern Rock one's being pulled, as well. Oh well - you snooze, you lose.

The admin headaches are something else I haven't really thought about. It's taken me six months from opening my ISA to actually getting around to thinking about another savings account, it may not be ideal for me

Primrose

There's no reason why you can't have multiple Regular Saver accounts. It all depends how much time and energy you're prepared to devote to logging their maturity dates and tracking down the best savings accounts into which to transfer them once they mature. With all interest rates so low at the moment, the extra interest you would earn may not be worth your time, which if you cost out at a reasonable rate per hour, might not be worth the hassle. For that amount of effort, if you can tie up the money for the longer term, a better financial return might be accumulating the money in your current account and every couple of months buying a batch of tax free National Savings Certificates.

Milarky

Primrose wrote: »

.. It all depends how much time and energy you're prepared to devote to logging their maturity dates and tracking down the best savings accounts into which to transfer them once they mature. With all interest rates so low at the moment, the extra interest you would earn may not be worth your time, which if you cost out at a reasonable rate per hour, might not be worth the hassle. For that amount of effort, if you can tie up the money for the longer term, a better financial return might be accumulating the money in your current account and every couple of months buying a batch of tax free National Savings Certificates.

I sort of agree with this but I tend to look at the action of opening an account in toto to get around the thought of all the subsiduary steps (which are pretty trivial actually)

So, for example a RS of £250 x 12 months @ 5%....

That's 2% up on a 3% variable account...

Average balance £1625 x 2% = £32.50 before tax....

Now ask yourself how much time is actually involved across the 12 months - 3 hours?

Some people will feel that's marginal at best. It's partly a matter of taste.

But the mental exercise of working out the notional profit and imagining someone has just given you £32.50 and you agree to do a few small tasks through the next year is a useful way to think about regular savers.

Once you have committed to opening a first regular saver, therefore, the instinct to continue really takes over. Just think of this as picking up small windfalls..

This parallels the situation for 'stoozing' of course (the use of balance transfers and other borrowed money) except for the stoozer there is the added 'is it worth it' question of whether to 'commit' to borrowing. Again, the 'operational' way to think about this is as if someone has just given you the profit from a 12 months stooze and told you 'just return my capital in 12 months, will you?'

So each account/stooze decision is like a stand-alone profitable act - even though it comes to us a penny at a time in reality.

Going to the other extreme - we could just roll over and give our money 'to the government' by leaving everything in a current account at 0%. With CPI inflation at 3.7% that's like having a capital tax in the interests of a 'quiet life'