Savings advice

rev_henry

Now that we have something of a regular income, my wife and I are starting to think about saving a bit better.

We currently have one ISA paying 2.5% until the end of the tax year and another paying 2.6% but that one runs out next month. About £9k in total across both.

We'd like to start regular monthly saving on top of this, maybe £300 a month, with a view to it vaguely being towards a house deposit in 18 months or so.

I've read a bit about S&S ISAs, but frankly they baffle me, even though I thought I was financially savvy!

So we're thinking of opening the Barclays regular saver at 3.25%. We'd put it in my name - as I'm still a student (though with less than a year left now!) with little proper income of my own we could get the full 3.25% without tax.

However, does anyone have any better ideas? I would consider investment type things if I could understand them, and it would have to be one that does not require too much effort checking up on it.
We keep meaning to switch our current account to Halifax for the £5 a month, though would it be worth going to First Direct just for the 6% regular saver instead?

anselld

Go to First Direct.
Get the switching bonus.
Open 6% reg saver (one each).
Open Halifax Reward current accounts (one each plus one joint) as well just to get free fivers.

Bear in mind that any reg saver will pay out at the end of 1 year by which time if you are lucky you might not be a non-taxpayer any more!

rev_henry

Could we run 2 reg savers off the one First direct joint account?

I hadn't thought about the one year thing, I certainly will be paying tax in a year's time (my job starts in August), but it would still be worth having the tax free element for this tax year (or what's left of it) wouldn't it?

anselld

rev_henry wrote: »

Could we run 2 reg savers off the one First direct joint account?

You can do yes. You can also put £1 in a Savings Account if you want to avoid the regular funding requirements.

rev_henry wrote: »

I hadn't thought about the one year thing, I certainly will be paying tax in a year's time (my job starts in August), but it would still be worth having the tax free element for this tax year (or what's left of it) wouldn't it?

The problem is regular savers (and annual interest accounts) pay interest in one lump at year end so it is all taxable in the year it is paid. The halifax accounts on the other hand are monthly and non-taxpayers can actually reclaim tax on the fivers making them £6.25.

rev_henry

Ok, I'm formulating something of a plan now:

'Switch' current account to First Direct
Put £1 in FD savings account.
Open 2 FD regular savers, put £600 a month into them from our ISAs.
When the 2.6% ISA ends transfer as much as possible into the 2.5% one (won't be able to do all of it as I'll reach the limit).

Then open a Halifax Joint and use this as an actual normal account.
Now I'm just trying to think of a way of getting the £100 switching offer from Halifax too...

Of course I'd also like this to not result in having some ridiculous number of current accounts and having to set up regular movements of money between them all each month to qualify for whatever...

This plan also results in one of us not using our ISA allowance...maybe open another ISA for the remaining money that won't fit in anything else.

anselld

rev_henry wrote: »

Of course I'd also like this to not result in having some ridiculous number of current accounts and having to set up regular movements of money between them all each month to qualify for whatever...

Well this certainly is an occupational hazard! ... and you haven't even mentioned Santander 123 and Lloyds/BoS/TSB Vantage.

kingmonkey

There is no limit to ISA transfers.

ISA transfers are rather a special process. It is not simply a matter of withdrawing and depositing. Ask your new bank/building soc for an ISA transfer form and use that.

The ISA limit refers to the amount of new money you can deposit in an ISA during a tax year.

atush

I would not take money out of ISAs into a regular saver if you will be taxed on the proceeds. Use new money for those.

rev_henry

kingmonkey wrote: »

There is no limit to ISA transfers.

ISA transfers are rather a special process. It is not simply a matter of withdrawing and depositing. Ask your new bank/building soc for an ISA transfer form and use that.

The ISA limit refers to the amount of new money you can deposit in an ISA during a tax year.

Ah yes I realise that but moving out of the expiring 2.6% one would mean moving it from hers into mine therefore it couldn't be done as an ISA transfer.

uptothesky wrote: »

I vote for finding and using every day deals to save on daily products. You should have a consuming plan, separate your budget and use it as plan.

Already do that pretty well!

atush wrote: »

I would not take money out of ISAs into a regular saver if you will be taxed on the proceeds. Use new money for those.

Yes, but if the regular saver is paying 6% it more than negates the tax free element.

rev_henry

So I'm currently minded to switch the joint current account to First Direct and open their regular saver. Put £1 in a savings account with them to avoid the current account charge. But then what to do with the excess money?

Thinking of then changing the actual current account we use to maybe Halifax for the free £5 or Nationwide for the 5% interest.

But it would be a right pain to switch all the direct debits etc from First Direct without actually closing the FD current account... hmmm.