£30k to store away for short time

magfo

Hello

We are in process of having an extension built and have today had the extra cash from our mortgage paid into our current account. The first big payment on the extension wont be due until at least end of August (approx half amount) with the rest having to be paid about 4-6 weeks later.

We bank with Lloyds TSB, but their savings accounts are not the best for interest. So I wonder if there is a handy savings account out there that we can get the best interest rate from, leave our money in for a shorter time and gain access to it quite easily (to transfer back to Lloyds current account when payments are due on extension) I would want it to be online access as this is easiest to keep track of but I would also need to be able to do a transfer out of the account to another bank (back to my lloyds current account).

The best interest I can get with Lloyds is on the e-savings account. We would get 2% net AER (2.5% gross) variable rate. This includes a 12 month bonus of 1.5% fixed, but that's not a problem as we wont be using it in 12 months time when the bonus stops anyway.

Would you recommend sticking with Lloyds for the easiness of it or changing to another bank to gain more interest?

Thanks

psychic_teabag

Lloyds have a "secret" incentive saver account paying 3%. There was a story in the Times a couple of weekends ago saying that if you phone and ask for it you can have it, but they don't offer it. There are other threads on here discussing it. (Also mentioned in some of the vantage threads)

Failing that, tesco is good for faster payments, allowing instant transfers between savings and your current account held elsewhere. It's offering 2.9% or 3% or something.

magfo

Thanks you very much for that info. I did see the mention of Lloyds Vantage, but wasn't sure what that was. Is it available to view online, bearing in mind I do already have internet banking for lloyds for all my other accounts.

So do I need to ask about the lloyds vantage account or is it even more secret that I have to have a secret password to unlock the information, lol!

I'll also look into tesco. If transfers can be done easily from their savings account it will make my life much easier!

magfo

Just looked up the vantage thing on the bank website. Am I right in saying this is not what you were talking about and that it is an additional savings account that wont be mentioned?

The vantage addition to my current account only has a limit up to £7000. This must be something else, is it?

Will search vantage through the forum and see if where I can see mention of the savings account.

psychic_teabag

Sorry, when you said you banked with Lloyds, I just assumed you used the vantage feature. It's a (free) add-on to current accounts offering interest on balances up to 7000 (reducing to 5000 at the end of this month) provided you pay in (eg transfer out and in) £1k per month.. The incentive saver is a separate esavings account that doesn't seem to be advertised. It came up in context of vantage thread because people are looking for where to move the extra 2000 after the upper tier vanishes on the current account + vantage.

If you google for it, you can find pages about the incentive saver on Lloyds site. But I've never seen a way to navigate to those pages from within Lloyds. Also, they seem to mention interest rates of 2.7%, whereas as far as I know they are currently offering 3%. (It all seems very odd to me...)

(You're allowed 3 current accounts with vantage each, so if you're a couple, you could just use 6 accounts between you to get 3% on £30k)

magfo

Oh right. Okay, maybe you can help me understand this.

At the moment we each have a current account and we have a joint current account, so 3 current accounts. Our salary is paid in the first instance into each of our own current accounts (over £1k each) and then some of that is transferred into the current account (well over £1k in total) So that would mean that we satisfy the criteria on all 3 accounts of the £1k being transferred in?

So, are you suggesting that we split the £30k over the current accounts (£5k in each) and then put the remaining £15k into this incentive saver aco!!!!?

Sorry, I thought all this would be simple, but it's turning out to be much more complicated than I expected!

Thanks

psychic_teabag

Yes, it sounds like your salary is enough to satisfy the 1000 per month funding on all the accounts. (But many of us here just circulate £1000 between accounts without adding any new money in.) So if you were to add the vantage option to the accounts you'd get 4% interest on balances from 5k to 7k at the moment, but that tier will be removed at the end of the month, and you'll get 3% on balances of something-or-other up to 5k.

I don't know why vantage is something you have to ask for on your account since it's free. (well, maybe there's a downside, like extra fees on overdraft or something ? I don't know - I just treat it as a high-interest savings account with added benefit of debit card.)

Once the vantage rate drops at the end of this month, I personally would probably keep more of the money in the incentive saver to keep it out of the way, but that's your choice since the interest rate will be the same.

Oh - one thing you should check is whether there is any penaly for withdrawing from incentive saver. It seems that previous versions of this account pay no interest in months when there is a withdrawal. I think the latest version doesn't have that - I opened my recently and haven't yet received the T&C in the post.

The tesco online banking requires a card-reader. Some people hate these. I don't mind them, but it does take a while to set up when you first open the account. So might not be worth it for your timescales.

You're not going to earn a huge amount of interest in 3 months - around £300 before-tax for 4 months at 3%. So you need to decide how much trouble it's worth going to. You might consider a simple compromise
add vantage to current accounts and store the maximum in there - 21k until the end of the month, then 15k when the rate drops
store the rest in a simple lloyds esaver at around 2.5% or whatever you can get - could ask them about the incentive one, but in the short term, it's not going to make a lot of difference.

Do you have your ISAs for this year ? Normally it's much better to use an ISA for long-term savings. But if you don't have any savings, and wouldn't otherwise be using your ISA allowance, you could save £5k each tax-free that way.

magfo

That helps a lot, thanks again.

Yes I do have an ISA and I pay regular amounts into it which i'd rather not disrupt.

I think i'll take your suggestion about the vantage on the 3 accounts for now with £7k each in them (and £5k at end of month), and then just get the e-saver account for the rest. It's not going to make me big bucks, but it's good to know we can make the most out of having this money sitting about waiting to be spent.

I think I did read some terms stating that there wa sno interest paid in the months you make withdrawals from the incentive saver, so it's maybe not worth the hassle when we will only have it in short term.

Thanks again for taking the time to reply to me.