Getting the best interst rate from current accounts

woodentop4

Being new to this site and well stupid ! here]s a question for you clever people.

I want to get the best interest I can on my savings. It looks like the best rates are from current accounts if you want access to your cash as I do.

I was looking at opening 2 or 3 accounts with different banks ie, Yorkshire, Lloyds etc - the ones that are giving between 3 % and 5%.

They all have restrictions that require £1000 deposited every month not from internal transfers.

My question is can I set up a system of transfers between banks transferring the £1000 per month between each bank in turn?

Eg - transfer £1k from bank A on 6th of month, to bank B, Then transfer the same £1k from bank B on 12 of month to bank C, then transfer same £1k to bank D on 18th of month. But keeping the max amount in the bank so that I get the max interest on my capital - (between £3k and £5k)
So I'm just swapping the £1k between the banks to comply with their conditions.

Hope that makes sense ?

Any observations or comments ?:T

grumbler

The answer to your question is YES.

YorkshireBoy

woodentop4 wrote: »

They all have restrictions that require £1000 deposited every month not from internal transfers.

Not all have such restrictions. For example, Lloyds, TSB, and BoS (all paying 3% AER) are happy with internal transfers, as are Halifax (for the free fivers).


However, YB, Nationwide, & Santander* do require external funding.


But unless you've a great deal of money you could make life a lot easier for yourself by utilising the max number of accounts allowed with each institution, ie 2 with Santander, 3 with Lloyds, etc (after first doing the 1-off accounts with Nationwide (5%) and YB (4%).




* Santander only say the funding should not come from another Santander account in your name (whether sole or joint), so it can come from a partner/spouse's account in their sole name).

YorkshireBoy

woodentop4 wrote: »

Any observations or comments ?

If your accounts are maxed out, you'll be losing out on interest on 2 counts:


1. £1K of your money won't be making any interest for 12 days each month (that's nearly half the time!), with SOs spaced out by 6 days, and


2. Your interest won't compound. In it's simplest terms, lets say you have £5K in each of 3 Lloyds Vantage accounts and each account earns £10 a month interest, you really need to transfer £1,010 from [1] to [2], £1,020 from [2] to [3], £1,030 from [3] back to [1]...and then transfer out your £30 total interest elsewhere. Of course if you run with balances well below £5K you won't have this problem (very often, if at all).