What to do with money following exchange of contract on house sale

Catbells

I've Just exchanged contracts on my house and am going to rent somewhere until I find a house to buy.
A friend advised to invest the proceeds from the sale short term in a National Savings Online Saver.
What are your thoughts on this and from the name it sounds as though you can buy these online. Is this the case does anyone know. Otherwise how else would I open one? Thanks.

opinions4u

I'm assuming you mean NS&I Direct Saver. It pay 1.75% for an online account. An advantage would be that it doesn't have FSCS limitations due to being government backed.

Personally, on rate grounds alone, I'd suggest www.theaa.com/savings. This pays you 2.8% and falls under the Bank of Scotland FSCS coverage.

Catbells

Thanks. What is FSCS please.

Catbells

opinions4u wrote: »

I'm assuming you mean NS&I Direct Saver. It pay 1.75% for an online account. An advantage would be that it doesn't have FSCS limitations due to being government backed.

Personally, on rate grounds alone, I'd suggest www.theaa.com/savings. This pays you 2.8% and falls under the Bank of Scotland FSCS coverage.

Thanks again. Just looked at the AA Direct Saver and you can access it any time and as you say its 2.8%. What if any, would be the downside to this apart from it being a car organisation and not a financial one.

xrjtg

The FSCS is the Financial Services Compensation Scheme, which is the organisation that steps in to protect depositors in the event of a bank collapse. In return for a compulsory levy on UK registered banks they guarantee that the first £50000 deposited with each bank or building society will be protected (but note that some banks trade under multiple names, and the £50000 protection is shared across the group).

The AA account is actually administered by Birmingham Midshires, which is in turn part of the Bank of Scotland; the AA name is used for marketing reasons. The only minor downside is a remote chance of losing some of your money if you have more than the £50000 with them.

opinions4u

Catbells wrote: »

Thanks again. Just looked at the AA Direct Saver and you can access it any time and as you say its 2.8%. What if any, would be the downside to this apart from it being a car organisation and not a financial one.

The AA rate includes a 2.3% bonus for 12 months.

The key downside that I see is the rate you will get once that year has expired.

squirrelz

And it only pays interest annually?

joerugby

Acromas, the private equity backed frim which owns the AA and Saga, incurred losses of £529m last year as a result of massive interest payments on its debt.

That is not to say it's necessarily in financial trouble ...... but it's no longer simply a motoring organisation!

Personally I'd stick to the £50k per person limit

opinions4u

joerugby wrote: »

Acromas, the private equity backed frim which owns the AA and Saga, incurred losses of £529m last year as a result of massive interest payments on its debt.

Personally I'd stick to the £50k per person limit

But the deposits sit on the balance sheet of the Lloyds Banking Group (under the Bank of Scotland banking licence), which is 41% owned by HM Government.

So if Acromas went under, there would be absolutely no impact on the safety of AA and Saga branded savings accounts.

joerugby

opinions4u wrote: »

But the deposits sit on the balance sheet of the Lloyds Banking Group (under the Bank of Scotland banking licence), which is 41% owned by HM Government.

So if Acromas went under, there would be absolutely no impact on the safety of AA and Saga branded savings accounts.

Companies like Acromas have bought brands like AA and Saga in order to suggest to an unsuspecting public that they are something that they are not. It's worth making this clear.

Your point regarding Lloyds / BOS is correct but I still wouldn't risk more than £50k per person

Catbells

joerugby wrote: »

Companies like Acromas have bought brands like AA and Saga in order to suggest to an unsuspecting public that they are something that they are not. It's worth making this clear.

Your point regarding Lloyds / BOS is correct but I still wouldn't risk more than £50k per person

I think I understand what you mean here but I would be less confident of their image as a car recovery service than I would have been if they were a bank. Surely this is the case for most people.

The scheme would suit me because I'll have a largish sum of money for a short time ie after exchanging contracts on my house while I look for somewhere else to buy.
What would happen if I wanted to take back the funds after, say 5 months to buy a house? Opinions4u - you mention it was for 12 months only is this upto or only for 12 months?