Bank switching and savings advice

Yodelling_Spongecake

Greetings all - I was wondering if I could draw on some of your collective wisdom to improve my banking and saving methods. My bank shifted out of town sometime last year and I'm looking to change and get some better interest.

I'm currently with Halifax and have £4.5k in a student current account and £900 in a web saver with swearword-poor interest. I've also got another £2.5k in a National Savings Investment account that earned a grand total of £5 interest in the last six months.

The work I currently do is cash-in-hand so my local branch closing down is somewhat vexing; the nearest Halifax is now 40 minutes' drive away. I'd like to bank with a branch within walking distance, so the banks I can choose from are Lloyd's TSB, Barclay's, NatWest, Leek United Building Society, Derbyshire Building Society, and the Royal Bank of Scotland. Having said that, I'm not averse to banking non-locally if I can get a better deal that way.

I graduated three years ago and still haven't found my way into a solid career, so I haven't got much of a good income going (No more than a couple hundred a month; still living with parents, sigh), but I haven't any debt other than my student loan and no financial commitments beyond my mobile phone contract. I'm looking at re-entering education or training and also looking for jobs, and so I'd want a portion of my money easily accessible in case I find a course or need to move etc. My current proto-plan is to put about 4k in a fixed-rate savings account and have the rest in a current account.

Is this a good plan, and would anyone recommend a particular bank? Steep me in your wisdom, MoneySaver people!

Lokolo

Given Lloyds and Halifax are merging if you like Halifax, go for Lloyds.

(although I suspect they will remain separate entities, it will be easier to manage accounts)

Consumerist

So you've got a little under £8K earning you next to nothiong and your proto-plan doesn't seem to quite fit your requirements.

If your income is around £200 pm then you don't pay tax at the moment but if you are likely to receive a significantly improved income during this year then you should consider putting up to £5,340 into a cash ISA. Santander is offering 3.3% AER (variable) at the moment with easy access.

Leaving significant amounts in a current account is usually not very profitable unless you are able to pay in at least £1,000 pm to earn some interest on the account.

So, for the remaining £2.5, you should be looking for a savings account with the best rate you can get. Given the uncertainty of your job prospects, you might be wise to avoid fixed-term, fixed-rate savings.

Halifax Web Saver Reward is offering 2.8% AER, for example. Don't foget to complete an HMRC form R85 so you get your interest paid gross.

xrjtg

Tying together a few threads, the Lloyds Vantage current account pays 3% on balances between £3000 and £5000. I would echo the general sentiment not to keep excessive amounts in current accounts though: this is something of a special case.

rb10

Do you have a Post Office nearby? You can pay into your Halifax current account at any Post Office. (You'll first need to phone Halifax up to get a paying-in book).

Halifax Web Saver Reward at 2.8% is a good savings account; their ISA Direct Reward at 3% is even better (for up to £5340). Just remember that the rate only lasts for a year; you'll need to change it then!

Consumerist

xrjtg wrote: »

. . . the Lloyds Vantage current account pays 3% on balances between £3000 and £5000. . .

You will need to pay in at least £1,000 pm to qualify for Vantage interest. Since your monthly income is currently much lower than this, you will need make arrangments to circulate £1,000 of your savings every month if you are interested in this option. There are other threads on this board with the details if you need help with it.