Circular feeding for minimum funding

fwor

I don't have a regular income (by choice, not circumstance) and so have to resort to "feeding" my current account (Santander) in order to meet their minimum funding requirements.

To date I've used a Cahoot savings account which I top up twice a year to provide monthly scheduled payments into the account. But Cahoot savings rates are rubbish, so I'd like to find a better way.

Is anyone aware of any potential problems with a more blatant "feeding" arrangement, where I set up a monthly standing order for £1500 from my Santander 123 account to a First Direct current account, and the following day another monthly standing order that transfers £1500 back again?

I spoke to Santander today and they didn't seem to have a problem with it, but I'd like to know if First Direct would (preferably without asking them!).

I don't actually want the FD current account for anything, but have to have one if I want to open a FD cash ISA...

innovate

If you spend a little time on this board and the savings board, you will find that many people do this, and more.

dalesrider

ISA may mean you do not need the £1,500 funding a month.


Or just open a std savings acc with £1 and that means no min funding charge.

fwor

dalesrider wrote: »

ISA may mean you do not need the £1,500 funding a month.

Or just open a std savings acc with £1 and that means no min funding charge.

You can't open their ISA without a current account. You can't have a current account (without charges) without meeting £1.5k min funding.

Most standard savings accounts are no good, because they don't allow standing orders or scheduled payments (Cahoot is unusual in that respect).

fwor

innovate wrote: »

If you spend a little time on this board and the savings board, you will find that many people do this, and more.

Ok - blatant, obvious circular feeding is no problem? That's what I wanted to hear.

It's an ideal situation, because the Santander 123 account pays 3% over £3k balance, so having the feed funds sitting there is no problem.

The FD ISA is attractive because, unlike many others they don't (to date) have the silly Santander rigmarole where you have to move your ISA every year to get a decent rate...

innovate

fwor wrote: »

You can't have a current account (without charges) without meeting £1.5k min funding..

Not true.

The only thing you won't get is the £100 account opening bonus if you don't pay in £1.5K (or £1K, soon). But you also have to use their switcher service to xfer at least 2 DDs if you want to get the £100.

If you do not care about the £100, there is never a need to pay a set amount into the account. Just find out about more by reading their site and/or the FD threads on here.

innovate

fwor wrote: »

.... the silly Santander rigmarole where you have to move your ISA every year to get a decent rate...

It's not just Santander, it's effectively the whole industry. Just wait for FD to do the same.

It's no big deal to move your ISA once every couple of years or so. You just have to decide to where, fill in a form, and sit back.

fwor

innovate wrote: »

If you do not care about the £100, there is never a need to pay a set amount into the account. Just find out about more by reading their site and/or the FD threads on here.

I said that because the FD website says the following about their current account:

"If after six months you do not pay £1,500 per month into your 1st Account you may have to pay a fee of £10."

Is that just an empty threat on their part?

You may be right that moving your ISA is no big deal, but I prefer not have to do it, because from a customer point of view it should not be necessary (but I understand that they do it for their own commercial reasons).

YorkshireBoy

fwor wrote: »

I said that because the FD website says the following about their current account:

"If after six months you do not pay £1,500 per month into your 1st Account you may have to pay a fee of £10."

Is that just an empty threat on their part?

They say you "may" have to pay a fee.

The reason they say "may" and not "will" is because if you hold a qualifying product (list on their website/in their T&Cs) you DO NOT have to pay a fee.

innovate

fwor wrote: »

"If after six months you do not pay £1,500 per month into your 1st Account you may have to pay a fee of £10."

This is true, but not the full story (which I admit isn't terribly easy find on their site):

Read clause 1.1.1 in Section 3 of the T&Cs
Then check what is says on the Rates and Charges page about the waivers.

dalesrider

fwor wrote: »

You can't open their ISA without a current account. You can't have a current account (without charges) without meeting £1.5k min funding.

Banking with first direct usually costs £10 a month, but we'll waive the fee if you pay in at least £1,500 to your 1st Account each month, maintain an average monthly 1st Account balance of £1,500, or hold a selected first direct additional product. Take a look at our interest rates and charges section for more details of other eligible accounts

If you are going to point out that others are wrong about something.... At least make sure you are right :rotfl:

Simple savings acc and a 1st acc = NO £10 a month charge...
As would keeping £1,500.01 in a 1st acc.... But as it pays no interest that would just be plain stupid

For the really smart that get a O/D. Transfer £249.00 from 1st acc into savings acc. This means NO FEE and interest on savings while not using your money
Of course you would have to use the acc a bit to stop it being flagged up as dormant. But that would be no great loss to transfer some funds in and spend a few quid once a month or so.