Moving money between savings accounts

oldfella

given the interest rate changes, there have been several recent threads on this subject which has prompted me to try and better understand the process - apologies if this is old info.

closing an account on a Monday will normally get the money into your current account on a Weds (unless the closing account is A&L for instance when it takes another day). Accounts like B&B allow you to setup a direct debit, so if you time it correctly the cash can also be collected on Weds, and will arrive at B&B on Weds. Depending on how interest is paid on the last and first days - you will have lost between 1 and 3 days interest in this process. If the account you are closing pays interest on the last day, and the account you are opening pays interest on the first day, you will only loose 1 day's interest.

problem areas - banks like you to have money in the account the day before it leaves, so if the sum is larger than your credit limit, you would be advised to shift the collection to Thursday. It also matters what time the bank works out whether you have broken their rules - some will add up all the minus sums first at midnight on Tuesday, some will do the calculation at 1830 on Weds. It can be difficult to find out how your bank applies credit limit rules - so if in doubt move the collection to Thursday.

I spent a while discussing this with my local bank manager and his view was that as long as the sum was less than the credit limit, it should go out on the Weds with no fees or interest charges as they do a 1830 calculation.

any comments appreciated ...

Mike

Stonk

I always allow the extra day. Most of my transfers follow the Monday to Wednesday rule, but occasionally and for no apparent reason, a transfer that usually operates Monday to Wednesday suddenly takes an extra day and does not arrive until Thursday. The charges for getting this wrong prohibit me from taking the risk.

Milarky

That's right, you can only rely on the buffer provided by your overdraft - you must stay within that limit at all times.

In cases where you wish to send a larger amount - one not covered by the overdraft or where you can't be sure money intended for your bank would be there on the day you want it taken - you obviously have the safer option of sending money on the day yourself (because you can check your balance before making any payment) This has the drawback of lost days interest whilst the money goes from your bank to your savings account of course.

Some savings accounts will only link to your bank - which is a pain. It is preferably therefore to run two (or more) savings accounts of the type which allow full 'BACS' requests - so you can send from Egg savings to (for instance) cahoot savings and back again. These accounts also have features allowing you to deposit with them with no days lost interest - but the added flexibility of being able to 'BACS' large amounts which you could not easily pass through your bank is very valuable - plus they double-up as more general payment vehicles (eg min payments and other bills) so reducing your reliance on having a current account anyway.

Asking for the largest possible overdraft is one option which helps manage things - provided that you can keep the money in a directly linked savings account with the same bank that is (where you have money ready to move) Banks accounts don't always pay good rates - or don't always pay these on the full the balance.

BACS payments are due to speed up to become 'same day' from the end of 2007. This will come as great relief and will allow you to have just one current account and savings accounts with several different organisations provided you are organised enough to personally move all the payments you need to move without relying on direct debits. You won't any longer need to use the DD method for transferring from your bank to a savings account and I can see DDs falling into disuse.