effective way to earn the most interest

RoxRoxBling

Hi.
I was hoping someone could help me decide the pros and cons of this plan.

I am a basic tax payer.

I intend to dripfeed 250/month into a regular saver account with 4% interest (before tax)
As I need 2000 at easy access I will keep that much in an instant access account. But anything above this I will move to my isa (2.5%) (Thus not withdraw money from my tax free wrapper as I can save the years allowance)

As I'm only allowed one withdrawal from the regular saver, near the end of the tax year I will transfer money from the regular saver (4%) to my isa (2.5%) (by this time I plan to have deposited all of my 2013/14 allowance)

Is this an effective way to earn the most interest?

innovate

Why not keep the £2.5K in a 5% Flexdirect?

RoxRoxBling

innovate wrote: »

Why not keep the £2.5K in a 5% Flexdirect?

Because I don't have a flexdirect?

Gromitt

RoxRoxBling wrote: »

Because I don't have a flexdirect?

So why not open one? 5% is going to beat any instant access savings account out there.

innovate

Gromitt wrote: »

5% is going to beat any instant access savings account out there.

and by over 100%, on up to £2.5K.

RoxRoxBling

Thanx. I didnt know about this account. Just googled it and saw you need to pay in 1000/month. Can this be say transfer from my natwest account? And are their any other restrictions/conditions?

ETA: I see maximum balance is 2.5k in the account. But is it going to work if my salary is less than 1000? Where would I get the extra 50-150 from? Any suggestions?

This new information has confused me

YorkshireBoy

RoxRoxBling wrote: »

Can this be say transfer from my natwest account?

Yes.

And are their any other restrictions/conditions?

All applicable "restrictions/conditions" are shown on their website.

ETA: I see maximum balance is 2.5k in the account. But is it going to work if my salary is less than 1000?

Yes.

Where would I get the extra 50-150 from? Any suggestions?

Pay in £850, withdraw £150, pay in £150. Job done...in less than a minute!

RoxRoxBling

So technically if I keep 2.5k in the account then transfer 1k out then put it back in straight away, I get 5% interest?

YorkshireBoy

RoxRoxBling wrote: »

So technically if I keep 2.5k in the account then transfer 1k out then put it back in straight away, I get 5% interest?

Yes, but "technically" you'll get 4.89% gross p.a. interest, because you won't benefit from compounding.

And only for the first 12 months.

RoxRoxBling

YorkshireBoy wrote: »

Yes, but "technically" you'll get 4.89% gross p.a. interest, because you won't benefit from compounding.

And only for the first 12 months.

What do you mean by compounding?

YorkshireBoy

RoxRoxBling wrote: »

What do you mean by compounding?

Earn interest on interest, ie achieve the quoted AER.

Because the max interest earning balance is £2,500 your interest won't earn any interest, so best to remove it from the account and put it somewhere it will.