Maximising Return using Standing Orders for Current Accounts

Sherbet.Lemon_2

The current accounts section of the MSE website currently lists three accounts (at Bank of Scotland, Halifax and Santander) which require a deposit of £1000 each month and then offer £5 per month, £5 per month and 5% interest on deposits respectively.

Would it be possible for me to open all three accounts and have, say, £2400 that I keep in the Santander account and two monthly standing orders for £1000 from the Santander account to each of the other two accounts (with a corresponding monthly £1000 standing order on both accounts, scheduled a number of days later, to put the money back in Santander to earn interest)? If this would work, can anyone confirm that they have used this kind of idea with success?

If it does work, how much time would be needed to guarantee that the money would have transferred into the Halifax and Bank of Scotland accounts before the standing orders in those accounts send £1000 back to Santander? In other words, how close can I reasonably make the two standing orders in order to receive maximum interest and not run the risk of taking an unplanned overdraft if a payment is deposited late?

Are there any kinds of systems banks put in place to prevent this practice?

Thanks in advance.


Apologies if this question has already been asked in some form or another. I conducted a forum search, but found nothing.

blueberrypie

The first problem you'll encounter is that Halifax and Bank of Scotland are the same group, and that there is a limit on the number of Reward accounts you can hold - the limit is one in your sole name and one in joint names, so if you want one with Halifax and one with BoS, you'll have to have one of them in joint names.

The second problem is that SOs don't always go on the same day each month - you have to allow for weekends and non-banking days. This month, for example, we've had four days in a row which aren't bankiing days (25th & 26th both weekend days, therefore 27th and 28th both bank holidays). You'd also have to set up the dates for your SOs so that they were guaranteed not to fall too close to the beginning or end of the month - e.g. if your SO from Santander to Halifax usually arrived on 30th May but a weekend got in the way and it didn't arrive until the June 1st, you wouldn't have funded the account in May. So the spacing of the SOs actually needs to be quite generous.

That's one reason why many people who already do what you suggest don't use SOs for it - they do it themselves, using on-line banking. With Faster Payments, the transfers are instant and it can all be done in five minutes.

However this brings us to the next problem, which is Santander and FPs. Customers who were moved from A&L seem to still be getting *some* FPs, though it's unreliable, but as I understand it from other posts here, non-A&L customers aren't getting FPs at all.

And the final problem, which is that the whole thing involves having a Santander account. It shouldn't take very long browsing this forum to realise the problems that's likely to bring. 5% of £2500 is £125 (assuming you manage to keep the full £2500 balance every day for the whole year, and that you don't have to pay tax on it) - many of us who have escaped from Santander feel that losing that £125 is a small price to pay for not having to deal with Santander.

Paul_Herring

blueberrypie wrote: »

The second problem is that SOs don't always go on the same day each month - you have to allow for weekends and non-banking days. This month, for example, we've had four days in a row which aren't bankiing days (25th & 26th both weekend days, therefore 27th and 28th both bank holidays). You'd also have to set up the dates for your SOs so that they were guaranteed not to fall too close to the beginning or end of the month - e.g. if your SO from Santander to Halifax usually arrived on 30th May but a weekend got in the way and it didn't arrive until the June 1st, you wouldn't have funded the account in May. So the spacing of the SOs actually needs to be quite generous.

Don't forget Easter, and the upcoming royal wedding which is supposed to be a bank holiday as well.

I'd probably have the outgoing SO's on, say, the 7th of the month, and the returns on the 21st.

slush

I agree, using FP is a better option for keeping on top of minimum payments and deadlines, without having your money sitting somewhere earning a lower rate for a week here, and a week there, as you would with SOs. And so that we don't get hit with any charges.

The OH and I currently shuffle between 7 A&L/Santanders, 4 HBOS, a couple of LTSB Vantage accounts etc. We always make sure our min payments are from another bank and not internal transfers.

A simple spreadsheet allows us to keep an eye on things. Well, it works for us anyway.

slopemaster

blueberrypie wrote: »

many of us who have escaped from Santander feel that losing that £125 is a small price to pay for not having to deal with Santander.

I agree wholeheartedly