Using savings to replace earned income

echos_mum

My husband is about to retire & I work part-time. We have been sensible & done loads of what is suggested by MSE, & have pensions & some good savings. We have always had a joint a/c from which almost all household bills are paid by Direct Debit, & we have an a/c each for independent spending. This has worked very well for 35+years. However, now OH has no reliable income going to the a/c, we want to put a few thousand £ at a time into the linked savings account from various ISA's etc., & have a standing order from this savings a/c to the joint a/c so we do not have to change all the DDRs, and can get interest (even at 0.5%) on the savings. It seems that this is not allowed by our bank as "overdrafts are not allowed"! I have argued strongly, especially as we can MANUALLY do transfers up to several months in advance, & the rules appear the same as, if there are insufficient funds in the savings a/c., the tfr. won't go ahead. This is very discriminatory against older people who will inevitably have to rely on savings to cover their outgoings. CAN WE PUT PRESSURE ON THE BANKS TO STOP THIS UNECESSARY RESTRICTION? There can be no logical reason why their computers will not allow inter-account transfers.

Sceptic001

If I understand correctly you want a savings account which has a standing order facility. I don't think such a thing exists. The solution is to open a decent easy-access savings account (hopefully earning at least five times more than 0.5%!!!) and do a periodic manual transfer to your current account.

jimjames

Many online accounts allow transfers between savings and current accounts, would that work?

Loughton_Monkey

I really cannot see your particular problem.

Current accounts are current accounts. Savings account are savings accounts. They are different and always have been.

You seem to want change the whole banking system and 'invent' the concept of standing orders from savings accounts.

Current Accounts. Accounts, typically with cheque book. Can set up Direct Debits and Standing orders. Can set up overdrafts. Typically zero or little interest paid.

Savings Accounts. Accounts based on the simple principle of paying money in, to gain interest, and taking it out. No overdrafts. No charges. Not Standing Orders or Direct Debits. Typically pays 2.7% to 2.9% these days.

I don't understand your reference to 0.5% and I may have misinterpreted you problem. But if it is as I think, then my only advice is to try and understand the current banking system, as it has been at least for the last 40 years (in my own memory) and try as hard as you can to fit within it.

psychic_teabag

The Lloyds vantage current account doubles as a pretty good savings account (4% interest provided you can meet the requirements). Perhaps one or more of these (up to 3 each) would help.

I had a citibank online savings account until recently (when the 1-year bonus expirted) - that definitely allowed an automatic monthly transfer to the linked account. I think the Intelligent Finance online savings account also allows regular transfers to linked current account.

pqrdef

Loughton_Monkey wrote: »

But if it is as I think, then my only advice is to try and understand the current banking system, as it has been at least for the last 40 years (in my own memory) and try as hard as you can to fit within it.

But the system is obsolete. It belongs to the passbook era.

In a sane world, we wouldn't even use the bank's user interface software. We'd use our own choice of money management program, which would talk to all our accounts. We'd drag money from one bank to another with a mouse, and we'd watch it go with like a Windows file-copy box, but the sheets of paper flying across would be tenners. And we'd be able to set up any automated operations we liked, e.g. transfer money from A to B whenever the balances go above or below certain levels.

System

echos_mum wrote: »

My husband is about to retire ...

We have always had a joint a/c from which almost all household bills are paid by Direct Debit, ...

Hi echos mum

As others have already said, I do not know of any bank that allows standing orders from a "Savings" account.

However, you can have a Savings account and a linked current account where the interest on your savings account is paid monthly into the linked current account.

See the following example:
http://www.saga.co.uk/money-shop/savings/internet-saver/

Many different banks have similar products - select the best by searching on comparison sites.

Note, the linked current account can be the account you already have for paying your bills.

If the regular monthly interest + your salary/pension + your husband's pension are not sufficient to cover payment of all your regular bills, then the only other option I can think of would be for you to use some of your savings to purchase a small annuity (Purchased Life Annuity) to cover the shortfall. But, I'm not sure that now is the right time to be buying annuities, you may want to wait until the financial situation improves so that you get a better return on any annuity investment.

P.S.
Now that your husband is retiring, have you adjusted your share of savings etc. so that your two incomes make best use of your individual personal tax allowances ?

amcluesent

>There can be no logical reason why their computers will not allow inter-account transfers.<

AFAIK banks like RBS already have 'linked' savings and current accounts, where a transfer is automatic when the current account balance dips below a set £.

pqrdef

amcluesent wrote: »

AFAIK banks like RBS already have 'linked' savings and current accounts, where a transfer is automatic when the current account balance dips below a set £.

That's a start. Next step will be an automatic offset, so instead of overdraft charges they just reduce the daily interest-earning balance on the savings. Instead of carrying on like you owe them money, while actually they owe you money.

wriggly

What is being referred to is known as a "sweep", where money is taken from one account automatically when it is required in another account. It's quite common in share-dealing accounts, where you have one account for deposited money and another for buying securities.

It'd be trivial for banks to implement it (I've seen it provided in Australia), but it would require popular demand from customers - banks aren't going to implement it voluntarily since it allows customers to store money in a high-interest paying account until the moment it is needed in a low-interest account - it's much more profitable to force people to keep additional money in their low-interest accounts.

It'd be useful if accounts providing this and other useful features could be highlighted on MSE, even if they're not top-paying, since it would allow people such as OP to choose those accounts, and provide more pressure on other banks to compete on such features.

dunstonh

This is very discriminatory against older people who will inevitably have to rely on savings to cover their outgoings.

Can you explain where discrimination comes into it?

If its not offered to anyone then it cannot be discrimination.

It'd be trivial for banks to implement it

Lloyds have had it for decades. However, you either have to pay for it or be a value client to the branch (Branch has discretion to charge or not). You would think nowadays it would be more common.