Savings

bsms1147

Should be able to get 3% if you don't mind using a current account. Rates may increase in general in the next two months but I would heavily doubt they'll be above 3% before this time next year.

smudger1946

£50,000 and shrinking fast!!!

bsms1147

If you have some direct debits and don't mind moving some money around each month (automated with standing orders):

2 x Santander 123s (2x£19,000 @3%)
3 x LLoyds/TSB/BoS 'Vantage' (or equivalent) (3x£4000 @3%)

ColdIron

bsms1147 wrote: »

2 x Santander 123s (2x£19,000 @3%)
3 x LLoyds/TSB/BoS 'Vantage' (or equivalent) (3x£4000 @3%)

Surely you mean the Santander is 2 * £20,000 an the Vantages and Enhance are 3 * £5,000

Archi_Bald

ColdIron wrote: »

Surely you mean the Santander is 2 * £20,000 an the Vantages and Enhance are 3 * £5,000

Probably not - the lower totals allow for the monthly interest to stay in the accounts and attract compound interest. Sensible to do if your total is around £50K, impossible to do if you start out with £100K.

eskbanker

Archi_Bald wrote: »

Probably not - the lower totals allow for the monthly interest to stay in the accounts and attract compound interest. Sensible to do if your total is around £50K, impossible to do if you start out with £100K.

I think the definition of an optimist must be someone who only puts £4K into a Vantage purely so as to leave enough headroom (25%) for compounding the interest!

bsms1147

eskbanker wrote: »

I think the definition of an optimist must be someone who only puts £4K into a Vantage purely so as to leave enough headroom (25%) for compounding the interest!

Why put any more in?

eskbanker

bsms1147 wrote: »

Why put any more in?

Because they pay 3% on up to £5K (and on up to £20K in a Santander 123)! Since these interest-bearing current accounts have minimum monthly funding requirements, account holders already need to be moving money in and out regularly anyway, so it's far more cost-effective to keep them as full as possible and skim off the interest if/when it takes the balance over the interest limit. The monthly net interest on £4K in a 3% account is roughly £8 so even with compounding it would take you over nine years for the balance to reach the limit of £5K....

bsms1147

With a finite sum of money though you cannot max all accounts.

And to reiterate, it makes no difference how you split the money between the accounts, as a pound will earn 3% whether it's in the Vantage or the 123, providing you meet the minimum funding requirements of each.

£4000 in the Vantage/£19,000 in the 123
earns the same as;
£5000 in the Vantage/£18,000 in the 123 (Vantage maxed out)
earns the same as;
£3000 in the Vantage/£20,000 in the 123 (123 maxed out)
just with the latter two you need to skim the interest off.

Splitting the proposed £50,000 up as I described, into two lots of £19,000 and three lots of £4,000 is probably the simplest solution to earning 3% on the lot. There is no need to put any more or any less in any of the accounts.

Finally, OP, if you wanted to squeeze an additional £24 out over the year then you could do it with just one 123 account (£20,000) and a minimum of six Vantage accounts (£5,000 each) (maximum of three from each provider: Lloyds/TSB/BoS).

eskbanker

Ah yes, I overlooked the fact that this was in the specific context of allocating exactly £50K, apologies! As you rightly say, spreading £50K across multiple accounts doesn't benefit from maxing any of them if they're all at the same rate....