Ways to Maximise Interest on Savings?

littleclaire

Hi everyone

I'm sorry if the answer to this question is already within the forums, but I've spent the last two days reading threads and come up with nothing solid.

I'm looking for the best way to earn maximum interest on the £40K my BF and I intend to save p/a. We don't have a lump sum, but would be looking at putting away £1.5K and £2K respectively each month. As many of the regular savings accounts available (with decent rates) have a maximum monthly deposit of £250-300, is the answer to have several of these?

I have a rough plan, but not sure if there is an easier way of doing things and/or whether this is generally frowned upon (in the eyes of a mortgage lender? We're looking at using these savings as a deposit at the end of 2015). The idea is:

1) Max out ISAs (almost there for 2013/14).
2) Open Nationwide Flex Direct Account, deposit initial £2.5K for the 5% interest rate.
3) Open First Direct 1st Account and Regular Saver for the 6% interest rate. Pay £300 into Reg. Saver each month
4) Cycle £1K between the two above current accounts each month to meet the Ts&Cs.
5) Open other savings accounts (Barclays Monthly Saver @ 3.25% £250 max / Norwich & Peterborough @ 3% £250 max / and maybe Nationwide Buy to Save @ 2% - no max)
6) Put the £1,200/£700 left into either the B2S or our Santander 123 Account for 3% rate. My only reservation about using the 123 account is that it is very accessible to us and I would prefer to keep the money somewhere it is harder to touch. As for the B2S, it is very unlikely that we would actually use Nationwide for our mortgage - would this be a problem?
7) At the end of one year, possibly put the accumulated funds into a fixed rate account that accepts a lump sum for 12 months while we repeat the cycle (assuming there are no better deals to keep money where it is).

For the sake of a few quid in interest, is it really worth the hassle of juggling so many accounts?

Am I making this over-complicated?

Thanks in advance for reading and any insight you can provide into 'best practice' in these situations.

Claire

elantan

just to add to the mix you can have 4 flex directs and hubby 4 as well taking care of 20k

Archi_Bald

elantan wrote: »

just to add to the mix you can have 4 flex directs and hubby 4 as well taking care of 20k

this would be worth it if you want a gamble. Nationwide have made it very clear that the 5% only applies to one account. And for however many accounts, the 5% lasts for 12 months and that is it. Though we haven't yet seen any reports that said interest has only been paid on one acdount.


littleclaire certainly got the gist of maximising your returns from the various banks and building societies. Though there are one or two others to get into the mix, and I would say it isn't over-complicated, just needs a bit of time to figure out what is best for you, and then execute it every month until the deals expire. Keep a watching eye on any new deals that might emerge and be of interest.

littleclaire

Thanks for your quick responses elantan and Archi Bald

Archi Bald - you say there are a couple of others to consider.. who would they be?

I hadn't considered having multiple accounts with one provider! Not sure if I fancy the risk, but if anyone else has experience with this, I'm all ears...?

Glad I've not missed the point in all of this. Crude calculations tell me the interest earned after tax deducted could well take care of a chunk of the fees involved in buying a house.

We're off to see BF's Dad tomorrow night to run the plan past him (knowing he himself has a few quid stashed away).

Claire

badger09

In addition to the First Direct Reg Saver, and Nationwide FlexDirect accounts, if you can be disciplined and trust yourselves not to withdraw cash from 'current' accounts, you can easily achieve 3% on much higher balances (than having other Reg Savers around 3% but with limited monthly deposits)

Santander 123 x 2 per person
Lloyds Vantage, Bos Vantage each x 3 per person
TSB Enhance - new kid on the block

all have a few 'hoops' to jump, but worth considering for the amounts you're able to save

tarnish

You have done a good job so far. I am trying to achieve the same max interest on savings and also have a savings regular savings acc with Leeds (max £500 monthly) but is this closed now? I haven't gone into ISA S&S, only cash.
Watching for any other suggestions too!

littleclaire

Thanks, badger. I hadn't considered Lloyds, BOS or TSB. Think I'm going to be spending my weekend applying for accounts! I don't need them all at once to begin with - this will really kick off after Christmas (can't believe I just said the 'C' word in September - sorry!), I should be able to jump through all the necessary hoops to meet the requirements. Best to strike while the rates are hot - who knows if the deals will be available in January.

Tarnish - have you looked at YBS (3%/max £250pcm)? It's not as good as some of the current accounts but beats inflation (just). Depending on where you live, there is 4% at Saffron BS but it's branch only (max £200pcm). Best deal at Leeds at the moment is 3.05% and I'm seriously considering that as the monthly deposit is higher than the rest - and it's a princely 0.05% more than my 123 account I used the money advice service website to compare accounts - definitely recommend.

Archi_Bald

littleclaire wrote: »

Tarnish - have you looked at YBS (3%/max £250pcm)? It's not as good as some of the current accounts but beats inflation (just). Depending on where you live, there is 4% at Saffron BS but it's branch only (max £200pcm). Best deal at Leeds at the moment is 3.05% and I'm seriously considering that as the monthly deposit is higher than the rest - and it's a princely 0.05% more than my 123 account I used the money advice service website to compare accounts - definitely recommend.

3% Regular Savers can easily be beaten - - First Direct is 6%, and HSBC is 4%. And there is the Nationwide FlexDirect Current Account @ 5%.

littleclaire

Yes, true, Archi Bald.. but if you aren't prepared to do the admin and want no-fuss savings accounts, the regular savers at 3% are an alternative.

Does anyone know the implications of having several current accounts on your credit file? Considering my modus operandi is to get a mortgage in the near(ish) future (2015), would this be seen as a problem?

Anyone got any thoughts on premuim bonds? BF's Dad has seen an average 3.5% return (admittedly with a full compliment of bonds) and as a higher rate tax payer, I'm considering sticking a lump-sum in there after the 12 month preferrential rates finish. Is this a good idea?

Archi_Bald

littleclaire wrote: »

Yes, true, Archi Bald.. but if you aren't prepared to do the admin and want no-fuss savings accounts, the regular savers at 3% are an alternative.

A FirstDirect or HSBC Reg Saver needs no more admin or fuss than a 3% Reg Saver. I would even go as far as saying that this is also true for the interest-paying current accounts.

littleclaire wrote: »

Does anyone know the implications of having several current accounts on your credit file? Considering my modus operandi is to get a mortgage in the near(ish) future (2015), would this be seen as a problem?

don't apply for any credit about 6 - 10 months before you want a mortgage.

littleclaire wrote: »

Anyone got any thoughts on premuim bonds? BF's Dad has seen an average 3.5% return (admittedly with a full compliment of bonds) and as a higher rate tax payer, I'm considering sticking a lump-sum in there after the 12 month preferrential rates finish. Is this a good idea?

The average for Premium Bonds is 1.3% AER. I have the full allowance in there but this is as part of a balanced portfolio. I have been netting below 1% for the last 24 months, and I would never recommend anyone should use PBs to save up money for a deposit or other big expenditure. It's a pure gamble, with odds worse than the Lottery.

R164ard

Hi - I have three Vantage accounts with Lloyds. No trouble at all juggling them online - trouble is, the highest rate of interest drops next month.

I also have Nationwide Flex and regular saver (£1000 per month)

I'm going to take advantage of the other ideas offered here - thanks.