Got £12900, newbie to saving - HELP!

Noctu

Hi everyone,
I'm a full time university student and have £12900 in savings at the moment - from various sources including savings set up for me as a child and insurance payouts.

Recently I opened up an A&L Direct Saver account, 5.38%, thinking this was the best option.

However now I'm not so sure.

I'd like to keep some of it out as an "emergency fund", say £1000 - in a savings account but it needs to be instant access.

The rest, I won't be touching for years. I've noticed the Coventry Building Society Fixed Rate e-bond, which is 5.80%. Is this a good one to go for?

Should I also be opening up an ISA? I'm not even sure that I'm a taxpayer or not - well, I have a part time job which pays about £36 per week, I think that's under the threshold of earnings. I know I don't get taxed on my wages. So I'm guessing I'm *not* a taxpayer? (Yes, I'm completely thick about these things!!) However I understand that this is only for up to £3000, so I'd need somewhere for the rest of it.

Anyone give a newbie some help please?

Hanxx

Yes, I'd be putting the full £3k in an ISA (although if you aren't a taxpayer there may be slightly better options), and also taking advantage of a regular savings account from someone like Lloyds TSB (8% gross). If you do take out a regular savings account be sure to set up the monthly direct debit straight from a good instant access savings account (Icesave? - 5.45%) to maximise your interest returns.

I think that the fixed rate eBond is a good option for keeping some of your cash locked away with a good return, as you don't need access to all of it. Then keep some of it instantly available in a high interest paying Savings account. As mentioned above, Icesave is about the best instant access account at the moment, but things could easily change when the banks announce their revised rates after the BOE base rate went up recently.

bobby_rae

I think it is still worth putting £3k in an ISA as you will soon be a tax payer and if you miss a years worth now, you won't get it back. There are some very competitive ISA's around as well, NS&I is recommended on this site. Then have a reg saver, A&L/ Lloyds are good. For the rest (all but the £3k and £1k you want spare), I recommend ICICI or Icesave.
A non endebted student - that's a rarity these days!

jitsuguy

Just remember if you open up a savings account thats is not an ISA then you will need to fill out the inland revenue form R85 which entitles you not too pay tax on the interest. You can get the form from the inland revenue website or if you're luck the branch might even have one!

Jitsuguy