How much buffer/savings to keep in a current account

thatwilldo

Hello

Not sure I am posting on the right part of the forum, but this area seemed most relevant for my question.

In the past my wife and I have not keep much of a buffer/float in our current account (£200/£300 at the most). Over 2 years ago I decided to build this up through rounding up DD amounts and saving a few pounds on petrol and other items. Gradually, this buffer built up to £3k. It was a nice feeling that this amount was money we could withdraw at any point (we do have other savings which we do not touch).

We are off to Florida later this year and I have been using a 0% credit card to spread the cost. I had been paying several hundred pounds on this card each month and was left with a balance of £1900 earlier this week still on the 0% deal (this ends in October).

I decided to use £1900 from the buffer/float to pay this off as we still need to pay for park passes very soon and these will be around £2k.

This has left our buffer/float at £1k which I think is the minimum for us for emergencies and because we both get paid at different points in the month.

I miss not having the £3k in the account and had got used to it (strange feeling I know) and I am now unsure whether to start again and build up the buffer. £1k seems adequate and there are other uses I could use anything this amount for e.g savings or paying towards holiday. I have to say that it was nice having a few 1000 in this account for treats etc for the children.

I should add we have a large overdraft facility but this has not been used in around 4 years and I would only dip into this in an emergency.

So after all of this, my questions are:

What do people generally keep in their current account as a buffer/for emergencies? And

Is it worth building this account up again?

Apologies for this long winded post and I hope people think these are useful questions.


Many thanks

innovate

How much you want in cash depends on your needs. I have several interest paying current accounts filled to the brim since I use them as savings accounts and there is nothing better around for cash.

Yorkie1

The general suggestion on here is to have 3 months' expenditure as a rainy day fund, if not nearer 6 depending on commitments and protection policies.

planteria

i havent generally done this at all, as i have always had access to a credit card if i ever need to make a purchase..and wanted my money to be earning some kind of return.

but nowadays, with current accounts being some of the best savings accounts...i suspect there are a lot of us who keep far more in our current accounts nowadays.

thatwilldo

Thanks for your response.

I should add that our current account is held with Natwest and does not pay interest.

Archi_Bald

thatwilldo wrote: »

I should add that our current account is held with Natwest and does not pay interest.

Well that seems a right waste of money, if I may say so, when you can get 4 or 5% elsewhere.

thatwilldo

Hardly a waste of money when it has been used to pay towards a holiday!

Current accounts paying a good rate are great but I don't want to move my bank account they have been first class for nearly 25 years with me.

I am not sure the rates will continue on current accounts anyway.

planteria

i keep accounts with HSBC and Barclays as my main current accounts too...though as it happens both give me interest free overdrafts.
but the point is that if you were to choose to move your current account to a provider that paid interest then you would be able to earn interest on your buffer. the options are there.

bigadaj

thatwilldo wrote: »

Hardly a waste of money when it has been used to pay towards a holiday!

Current accounts paying a good rate are great but I don't want to move my bank account they have been first class for nearly 25 years with me.

I am not sure the rates will continue on current accounts anyway.

Personal choice but missing out in potentially hundreds of pounds doesn't make me happy.

Many people now have a dozen or more current accounts, your an still keep your main one. Even if you want the joining bonus you only need to set up a couple of direct debits on a New account and then transfer it to get the joining bonus.

I banked with nat west many years ago but there sees, very little reason to deal with the big banks in most instances. Some people like first direct, I'd didn't, lloyds group offers some high interest current accounts and hsbc do some cheap tracker funds for investments and offer competitive mortgage deals, that's about it as far as I can see.

Archi_Bald

thatwilldo wrote: »

Hardly a waste of money when it has been used to pay towards a holiday!

Current accounts paying a good rate are great but I don't want to move my bank account they have been first class for nearly 25 years with me.

I am not sure the rates will continue on current accounts anyway.

If you had kept your money in an interest paying current account, you could easily have got a few free all-american gigantic pizzas thrown into your holiday...but you are probably right, that would be bad for your waistline, and feeling loved by your bank could count for a lot more.

You are right, there is no guarantee that interest rates on current accounts will continue, But it's been going for several years now, and new top paying ones have only just been launched. People have made very good money from these accounts, and as and if the interest paying will stop, they would be in now worse a position than you are with your bank now.

Each to their own.

jimjames

It's a money saving site so only expected that suggestions are made for saving or making money. 5% on £3k is £150 per year. Would you really just give that amount away?

If you really are set on staying with NatWest you can still open another account to keep the money in rather than holding massive balance in non interest account.