Santader 123 better than an ISA?

jem16

ranciduk wrote: »

Not everybody NEEDS two direct debits!

I don't!

Well you do actually as you NEED to have two direct debits for this account.

So you have a simple choice - get another DD or forget about this account.

macman

ranciduk wrote: »

No I'm living with my parents

So I don't pay any bills or anything

So if you are living rent and bill free and paying in £1K per month, would it be too hard to set up a DD to something for £1 a month (or any sum you want) to qualify?
By using the DD you also gain cashback on the qualifying accounts, such as water, energy, telecoms and CT: the whole point is to get this benefit so that it cancels out the £2 per month account fee.
The S123 rules are quite clearly set out; if you can't make the effort to set up a second DD then you will not get any interest.

Vortigern

ranciduk wrote: »

No I'm living with my parents

So I don't pay any bills or anything

So you could offer to pay your parents electricity bill for them - as part of your rent?

Becks34

If one opened up a tax free ISA prior to 05/04/13 paying 1.8% then would they have to wait a year for that interest to be earned?

If so, at present based on 20% tax, it appears that keeping the equivalent money in Santander is better at present as this would still be beneficial even with tax.

Is this right?

pip895

Becks34 wrote: »

If one opened up a tax free ISA prior to 05/04/13 paying 1.8% then would they have to wait a year for that interest to be earned?

If so, at present based on 20% tax, it appears that keeping the equivalent money in Santander is better at present as this would still be beneficial even with tax.

Is this right?

The only issue you haven't considered is possible future costs associated with not using your annual isa allowance. Years down the line you might need it - you might be into 40% tax and using up your full isa allowance - we might also get back to he more normal situation of cash isa's giving better rates than current accounts.:D

eskbanker

Becks34 wrote: »

If one opened up a tax free ISA prior to 05/04/13 paying 1.8% then would they have to wait a year for that interest to be earned?

Depends on the Ts & Cs of the relevant ISA (e.g. if there are bonus amounts payable conditional on no withdrawals) but in general the interest in ISAs is earned in the same way as other savings accounts, in that if you withdraw or close during the year interest will be earned on a pro rata basis.

Becks34 wrote: »

If so, at present based on 20% tax, it appears that keeping the equivalent money in Santander is better at present as this would still be beneficial even with tax.

Is this right?

Yes, in strictly interest-earning terms - the 123 paying 3% subject to basic rate tax equates to 2.4% (assuming that you're generating enough cashback from DDs to cover the £2 monthly charge, otherwise closer to 2.3%). However, there are longer term benefits from accumulating funds in ISAs over time, if you're saving enough to fill your annual ISA allowances and keeping it for a number of years.

planteria

macman wrote: »

So if you are living rent and bill free and paying in £1K per month, would it be too hard to set up a DD to something for £1 a month (or any sum you want) to qualify?
By using the DD you also gain cashback on the qualifying accounts, such as water, energy, telecoms and CT: the whole point is to get this benefit so that it cancels out the £2 per month account fee.
The S123 rules are quite clearly set out; if you can't make the effort to set up a second DD then you will not get any interest.

agreed. i pay my electricity by DD out of my S123, but other than that all DDs from Sant and Halifax are Savings Accounts i can claim the money back from (MonBS and Tesco and CitySave) and small payments to Friendly Society TESPs: making them free little investment pots. it is worth setting up a couple of small DDs to qualify for the interest.

innovate

planteria wrote: »

agreed. i pay my electricity by DD out of my S123, but other than that all DDs from Sant and Halifax are Savings Accounts i can claim the money back from (MonBS and Tesco and CitySave) and small payments to Friendly Society TESPs: making them free little investment pots. it is worth setting up a couple of small DDs to qualify for the interest.

Sorry to be dim. Why would you not pay all the cashback-earning DDs from your 123?

When you say you can 'claim money back from' the various places you have fed with DDs, do you mean the money is yours because they are your accounts?

Where do 'investment pots' come into it? Do you mean savings pots? There is nothing in the context of 123 accounts that strikes me as investments.

kingrulzuk

innovate wrote: »

(disclaimer: I am not saying banks will be selling fish as of Monday)

Hehehehehehe Funny

tell_it_how_it_is

I want to keep building up my ISA in case it does once again become beneficial, so, whereas I used to always deposit into it at the start of the tax year in April, these last couple of years I've left the money in my 123 account throughout the year, only moving it to the ISA at the end of March. Only makes about £35-40 difference, but every little helps.