What saving account ? Confused.

dickibobboy

Hello, i am currently a student and have grants and loans coming in to which some of it i am not spending and it is sat in my bank account, because its there i find i am spending more of it on little things where as if it was somewhere else it would be alright.

I need to be able to access it when i need to so nothing like the 2 year accounts are suited to me. It's not much that will be saved but its better than nothing. I am confused as to what actually goes on.

for example. I am with santander already so thats good, i am looking at

http://www.santander-products.co.uk/savings/esaver/index-03.html?urlgen=y&exp=30&cm_mmc=sanmsupm-_-sup-_-ec0000000000001esaver-_-homepage

Say i was to just put £500 in for now and chose monthly interest. What interest would i actually get?

opinions4u

The gross rate for monthly interest is 3.06%.

£500 x 3.06% = £15.30 a year.

Divided by 12 is approximately £1.28 a month. This will vary depending on the number of days in the accounting period.

If you're a taxpayer (or haven't registered for gross interest) you deduct a further 20% leaving around £1.02 for a typical month.

calypso_rhapsody

The princely sum of £15.30 a year - so roughly £1.27 pm (may vary a bit depending on number of days in month). That is gross as i assume that as you are a student you are not a tax payer. Would be about £1 per month if you pay 20% ....

So hardly worth doing for the interest but if it stops you frittering away £500 you might see that as a gain?

Tuesday_Tenor

OK the interest isn't going to be brilliant, but good for you for realising that the way keep better control of your money is to have:

(a) Current account for general use, funded with what you expect to use in a month, with a bit of 'mini-contingency' added in

and

(b) A savings account where you'll earn interest. As in your case, this first level of savings is probably just for use-later-in-the-year/emergencies/contingencies and so needs to be easy access. But even a simple one-step transfer will help you remember that any money you're transferring WASN'T INTENDED to be used this month, so will act as a bit of a brake. Actually I'd put all your advance grants and loans into the savings account, and transfer your monthly budgetted allowance in into the current account each month ... and try not to make any further transfers in the same month!

Once you've got this habit, you'll carry it through life with you, so that you don't overspend, and in time, when your income increases, you'll build up real savings.

As you're with Santander, their e-saver would seem to be the simplest for you to set up and manage. The interest is one of the best around too, BUT note that this will drop in 12 months when the bonus element ceases. At that point, they may have a new e-saver account with adequate interest that you can transfer it to, or you may want to look elsewhere.

HTH

mstar

so the bank will automatically deduct 20% from the interest payments? my current savings account with Lloyds never asked me they give me Net as they send me a letter to declare on my tax return.

My wife doesn't have to do a tax return and she also wants a savings account (also has a Lloyds savings account currently) will she now have to be taxed?

Am i missing something here???