Switch from First Direct to Santander?

hogweed

I’ll just start by saying that I've been with FD since they were formed, and they’re fantastic. No complaints whatsoever. However… I’m not earning much interest on anything, anywhere, and don't have a massive income these days, so it matters.

The reason I’m posting here is that, although a reasonably intelligent chap, the maths co-processor option in my brain was omitted, presumably due to budget cuts or something, so I've learned to my cost not to try and count things. Ever.

Can somebody give it a quick scan please? I’m sure I’ve made a basic error somewhere.

At the moment, I have a couple of grand in my FD current account, and a few more in my Virgin (spit) ISA.

The FD account obviously earns nothing; Virgin have just advised me they’re dropping their rate to 1.5%.

It seems that the Santander 123 account pays 3% if you have a balance over £3000 – so why don’t I just transfer my current account there, move the money from my ISA there too, and earn 3% on everything? Oh, and have my salary paid in every month, obviously.

Where have I got it wrong please?

Archi_Bald

You also need 2 DDs, and the account costs £2 a month. You only get 3% if your balance stays over £3K (and below £20K). But generally, your idea is sound.

Icesaver

Only problem with moving your ISA is you'll lose the tax free status of that money for good. It might be worth waiting until new tax year and starting a new fixed rate ISA with whoever might be offering a reasonable rate and transferring your ISA from Virgin to them. Obviously depends on whether you want/can tie up your ISA cash for a year or more.
The way interest rates are at the moment losing the tax free status @1.5% is probably not an issue but if your ISA is a substantial sum then it might be worth keeping it under a tax free umbrella even at low interest rate in anticipation of rates rising in the future.
If of course your ISA is currently less than the amount you can invest each year in a Cash ISA then my reasoning is irrelevant, as you'll be able to put it all back if and when rates rise as long as that is in a different financial year from when you withdrew your ISA cash.
Hope that made sense!

hogweed

Thanks very much to both. I’m on a relatively low income these days, so no real possibility of future investment in ISAs etc – essentially I have about £8k in one now, so it’s just a question of having it sitting with Virgin earning 1½% tax free, or wih Santander at 3% taxed.

Seems to make sense

Just such a shame that FD have effectively forced me to move after more than 20 years – their service is second to none, but every penny counts nowadays… and Santander, whose service used to be the definition of all that is bad, are now apparently pretty good.

apt

I don't see why FD is effectively forcing you to move. You want interest? FD has a regular saver paying 6%. The bank isn't making you have a couple of thousand pounds sitting in a current account which pays no interest but has a free £250 overdraft. You could keep FD, using it more advantageously, and open up an interest paying current account as well. Santander 123 is not necessarily the best option. Some pay a higher rate of interest for a year or 3% without the monthly fee.

hogweed

apt wrote: »

I don't see why FD is effectively forcing you to move. You want interest? FD has a regular saver paying 6%. The bank isn't making you have a couple of thousand pounds sitting in a current account which pays no interest but has a free £250 overdraft. You could keep FD, using it more advantageously, and open up an interest paying current account as well. Santander 123 is not necessarily the best option. Some pay a higher rate of interest for a year or 3% without the monthly fee.

I don’t really understand the relevance of their “Regular Saver” account? As I mentioned above, I do not have sufficient income to make much in the way of future investment, and what I want to do is earn a decent amount on my existing £8k. That account doesn’t allow you to transfer lump sums in like that. So yes, you can earn 6% on the tiny amounts I’d be able to pay in each month, but that’s it.

You’re also quite wrong about FD not making me keep my money sitting in an interest-free account – unless I maintain a balance of £1500 “dead money” in my current account, AND some money in a Savings Account with them, they charge £120 a year for the privilege of earning no interest.

I might be bad with figures, but I’m not THAT bad.

apt

Yes, you are that bad. If you open a savings account with FD (not the regular saver) and put £1 in it you will not be charged the £10 per month fee. It is either a £1000 balance or a savings account to avoid the fee, not both.

hogweed

apt wrote: »

Yes, you are that bad. If you open a savings account with FD (not the regular saver) and put £1 in it you will not be charged the £10 per month fee. It is either a £1500 balance or a savings account to avoid the fee, not both.

OK, this is very silly, and I'm not going to continue, except to say that you are telling me the opposite to what FD said last time they tried to charge me a tenner after a month when my balance accidentally dropped too low (though not into the red), while I had £10 in my savings account.

End of discussion from me - thanks to those who answered my question

Archi_Bald

It's not been £1,500 for quite some time now, only £1,000. However, as apt rightly said, you can achieve the same by just having a normal esaver account.

This isn't some urban myth but it's officially stated on the FD website.

Banking with first direct usually costs £10 a month, but we'll waive the fee if you pay in at least £1,000 to your 1st Account each month or maintain an average monthly 1st Account balance of £1,000 or hold a selected first direct additional product. For new customers we waive the fee for your first six months. Take a look at our interest rates and charges section for details of the additional products.

http://www1.firstdirect.com/1/2/banking/current-account

meer53

hogweed wrote: »

OK, this is very silly, and I'm not going to continue, except to say that you are telling me the opposite to what FD said last time they tried to charge me a tenner after a month when my balance accidentally dropped too low (though not into the red), while I had £10 in my savings account.

End of discussion from me - thanks to those who answered my question

No it's not silly, Apt is correct. You don't have to pay the £10 a month. You appear to have misunderstood the criteria, try reading it again ?

Gromitt

hogweed wrote: »

You’re also quite wrong about FD not making me keep my money sitting in an interest-free account – unless I maintain a balance of £1500 “dead money” in my current account, AND some money in a Savings Account with them, they charge £120 a year for the privilege of earning no interest

I must be an exception to the rule then as I get my salary paid into my FD account, then a few days later I'm overdrawn until the next month when I get paid again. My only other account with them is the Regular Saver. Never charged me a penny in fees, charges, or interest.