What should I do with my money?

dannylfc_1

Hi guys, here is my situation:

• 21 yo and recent graduate
• No credit history and only have one student (now graduate) bank account with natwest
• Start graduate job in August that pays £40k+

Obviously I'm quite fortunate to start on a decent salary but I have little idea what to do with the money. However, I have searched around the site and this is my plan so far.

1. Apply for a credit card with natwest to improve credit rating and use it ever so slightly (because I have an account with them already I assumed it would be easier)
2. Open an ISA (with who?)
3. Open a better current account and close my graduate account (with who?)
4. A month or two into my job look at opening a savings account

Like I say, everything I know I have just tried to pick up from this site, in reality I think I'm quite clueless but these are important decisions I need to make and I'm wary of biased sales pitches should I go into, say, my Natwest Branch.

Any suggestions/advice/criticism would be really appreciated! :D

Hazzanet

dannylfc_1 wrote: »

1. Apply for a credit card with natwest to improve credit rating and use it ever so slightly (because I have an account with them already I assumed it would be easier)
2. Open an ISA (with who?)
3. Open a better current account and close my graduate account (with who?)
4. A month or two into my job look at opening a savings account

1. Good idea, but pay off in full each month.

2. http://www.moneysavingexpert.com/savings/best-cash-isa

3. http://www.moneysavingexpert.com/banking/compare-best-bank-accounts

4. http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

BugsyBrowne

dannylfc_1 wrote: »

Hi guys, here is my situation:

• 21 yo and recent graduate
• No credit history and only have one student (now graduate) bank account with natwest
• Start graduate job in August that pays £40k+

Obviously I'm quite fortunate to start on a decent salary but I have little idea what to do with the money. However, I have searched around the site and this is my plan so far.

1. Apply for a credit card with natwest to improve credit rating and use it ever so slightly (because I have an account with them already I assumed it would be easier)
2. Open an ISA (with who?)
3. Open a better current account and close my graduate account (with who?)
4. A month or two into my job look at opening a savings account

Like I say, everything I know I have just tried to pick up from this site, in reality I think I'm quite clueless but these are important decisions I need to make and I'm wary of biased sales pitches should I go into, say, my Natwest Branch.

Any suggestions/advice/criticism would be really appreciated! :D

Splash your money on a trip to phuket.

CLAPTON

1. yes get a CC and use it regularly for things you buy anyway and pay in full; preferably set up a DD for the full amount

2. an ISA is a saving a/c that is tax free; so open one with the best interest rate
similarly with 4. an ordinary instant access savings a/c

3. No don't close your current a/c as length of time with a bank helps you get credit;
maybe get a second one if it has any benefits you find useful

innovate

Why a credit card with Natwest? They don't figure top often if ever, and are not on the MSE best buys. Natwest would obviously love you to stick with them for the rest of your life, but you don't have to stick with them just because they were good you on the student account.

NatWest is generally awful when it comes to interest rates on ISAs (or anything else for that matter). Kazza's ISA guide, combined with the forum it sits on, is probably the best on the Internet.

If you want to make the best of banking, and the most of your money, you should consider moving parts, or all, of your money regularly. No single bank will always offer you the best deal, and sticking with a single bank thru thick and thin will not pay off in the long run. Generally, you don't have to close any accounts if you move money elsewhere - so you can keep your options open.

cottager

dannylfc_1 wrote: »

Start graduate job in August that pays £40k+

Congratulations

these are important decisions I need to make and I'm wary of biased sales pitches...

Quite right.

... should I go into, say, my Natwest Branch

Probably not... not for savings/ISA anyway, as there are far better deals around than they're currently offering, though they do occasionally have some better offers. We've banked with NatWest for years and they're absolutely fine for current a/c banking (recent technical issues excepted of course )
Better to start from the links given above to get you going with savings.

Having said that, as you're already a NatWest customer you could find their eSavings account useful simply from the point of view of moving money around online, as if you're already with NatWest both accounts will be there in front of you when you log in. Nothing to shout about interest-wise (1% gross), but it's instant access and also one of the few savings accounts from which you can send Faster Payments, so it can come in handy as a temporary "resting place" -- that's what we use ours for.

You can transfer your "overflow" into there from your current a/c very easily indeed online (and obviously back again). You could start building up what you want to save there, while you look into where to open savings accounts elsewhere for better interest, and then maybe just keep a little bit in it permanently as a buffer, in case the current a/c ever needs a bit of help. If we've had savings elsewhere on a deal with an end-date (e.g. a bonus period or a fixed rate account for xx years) we also find the eSavings a/c can be a useful place to send that money "back home" if we haven't quite decided what to do next with it.

innovate

cottager wrote: »

Having said that, as you're already a NatWest customer you could find their eSavings account useful simply from the point of view of moving money around online, as if you're already with NatWest both accounts will be there in front of you when you log in. Nothing to shout about interest-wise (1% gross), but it's instant access and also one of the few savings accounts from which you can send Faster Payments, so it can come in handy as a temporary "resting place" -- that's what we use ours for.

Having your savings account(s) in the same bank as your current account(s), and taking an interest hit for the privilege, had its advantages before Jan 1 2012 when Faster Payment became mandatory. Since then, there is very little reason for settling e.g. for 1% interest on your savings when you can get 3.2% elsewhere. You can now transfer money from most savings accounts to a "linked" current account in no time, and increasing numbers of savings accounts allow you to make payments to any current account.

Also, there is no good reason really to have only one current account. For example, if you bank at Natwest, you could still have a Halifax account (for the £5/mth), a First Direct Account (so you can avail yourself of their 8% Regular Saver), and similar for HSBC for their 6% Regular Saver.

What you do need if you have multiple accounts is good housekeeping. I use an ancient copy of Microsoft Money to keep track of my accounts, but a spreadsheet could probably do the job. Also, I use Egg Money Manager (EMM) for logging into multiple accounts. Not sure now whether EMM is still available to new customers, but accountunity does the same (both only function in IE).

Lastly - - I have a bit of a bee in my bonnet about current accounts that pay no interest. Lloyds Vantage and Santander 123 are proof that banks can afford to pay comparatively very decent interest for current accounts, and either/both of them are perfectly good current accounts, with superb online facilities and Branch / telephone support if you need it. I do still have a Natwest current account from about 25 years ago, and I won't close it unless they force me to, but I won't use it for everyday business until they pay me better interest than some other bank.

We live in an age of unparallelled opportunities for managing our financial affairs because the technology and our ability to use it, the regulatory framework and the competitive nature of the industry all work in our favour. Sadly, interest rates and economic growth don't look quite so good - - - all the more reason to exploit each and every good opportunity offered by whatever bank and/or investment vehicle.

dannylfc_1

innovate wrote: »

Why a credit card with Natwest? They don't figure top often if ever, and are not on the MSE best buys. Natwest would obviously love you to stick with them for the rest of your life, but you don't have to stick with them just because they were good you on the student account.

NatWest is generally awful when it comes to interest rates on ISAs (or anything else for that matter). Kazza's ISA guide, combined with the forum it sits on, is probably the best on the Internet.

If you want to make the best of banking, and the most of your money, you should consider moving parts, or all, of your money regularly. No single bank will always offer you the best deal, and sticking with a single bank thru thick and thin will not pay off in the long run. Generally, you don't have to close any accounts if you move money elsewhere - so you can keep your options open.

I've took a lot of your advice on board and I've signed up to accountunity and studied Kazza's guide. My reason for a credit card with Natwest - I assumed I'm more likely to have my application accepted by them as I've no credit history, but I've held a student account with them for 3 years. I don't think I'll be accepted by the best buys? Other than that, perhaps the Aqua Reward card is my best bet?

Thanks again!

innovate

dannylfc_1 wrote: »

My reason for a credit card with Natwest - I assumed I'm more likely to have my application accepted by them as I've no credit history, but I've held a student account with them for 3 years. I don't think I'll be accepted by the best buys? Other than that, perhaps the Aqua Reward card is my best bet?

TBH, I don't know much about credit ratings for youngsters like yourself - - you might well be right that you have nothing much yet on your Credit Agency files. But have you actually checked what they have about you? See http://www.moneysavingexpert.com/loans/credit-rating-credit-score/#trick for some further information.

Another thing for you to do might be to make sure you are on the electoral roll. Also make sure you have valid picture ID (passport, driving licence), as well as some banks stmt (Natwest?) or utility bill showing your name and address because you will need that when applying for accounts at other than NatWest.