Maximum savings from switching current accounts

edp33

I am a 40% tax payer and my wife works just 8 hours a week on min payment so is under the basic tax threshold

We have a £3k credit card bill on 0% interest until September 2014 and have £3k saved in the coop current account usually I would clear debts before savings but as I am on 0% I would like to maximise savings before paying it off in September

I have a coop account for my income and bills, wife has a Barclays account for her bills and a hsbc joint account for leftovers after bills shopping etc


Hence is the following the best way of saving until then

Switch from wife's Barclays current account to halifax in wife's name only and transfer £750 a month from my account to halifax to meet criteria.
Profit: £100 for switching and £5 a month, may to August=£20
Total =£120

Open first direct account in my name, transfer direct debits from existing hsbc joint account or coop current account
Requires £1000 transfer a month
Profit =£100 for switching and £100 if leave in 6 months

Open santander 123 account transfer coop current account direct debits
Cashback on mortgage, broadband etc
£2 a month but expect to get at least £15 cashback a month

Total until sept = £120+£100+£13 = £233

Income after tax is £3725 so meets criteria for transfers of each amount to the accounts

This beats cash isas etc in interest before then, do you see any issues or better approaches?

grumbler

edp33 wrote: »

Total until sept = £120+£100+£13 = £233

Income after tax is £3725 so meets criteria for transfers of each amount to the accounts

The criteria can be met by transfers between accounts. For this you don't need big income. IIRC First Direct do require switching the the salary to qualify for the bonus.

This beats cash isas etc in interest before then, do you see any issues or better approaches?

I don't see what one-off bonuses and cashback have to do with ISAs and interest, but Santander's 3% on £3K+ does beat most ISAs even after 40% taken off.

edp33

You are right It's just the current accounts we have don't give any perks had them a long time and with the switch incentive seems the quickest way to gain cash back

In terms of returns from the £3k santander 123 would be equivalent to cash isa just a shame charged at 40% and can't use wife's tax rate for savings, return would be small from May to September but still better than leaving in current account with no interest at present

VladDracula

grumbler wrote: »

The criteria can be met by transfers between accounts. For this you don't need big income. IIRC First Direct do require switching the the salary to qualify for the bonus.

I don't see what one-off bonuses and cashback have to do with ISAs and interest, but Santander's 3% on £3K+ does beat most ISAs even after 40% taken off.

What if you don't have a salary? Can you just transfer over £1,000 a month of your own money from another bank?

Also do you need to transfer over any DD. I could have sworn i read somewhere that you do but can't see any mention of it now.

Archi_Bald

VladDracula wrote: »

What if you don't have a salary? Can you just transfer over £1,000 a month of your own money from another bank?

You can.

VladDracula wrote: »

Also do you need to transfer over any DD. I could have sworn i read somewhere that you do but can't see any mention of it now.

That ceased to be a requirement in September 2013. Instead you must now use their switcher service which closes your old account.

http://www1.firstdirect.com/1/2/banking/current-account?WT.ac=FSDT_HM_CUR2038

VladDracula

Does the switching process to First Direct in which you get £100 have to begin during account application? I have just applied for an account and it was opened but the page closed down before i could complete the switch.

Is there a way to restart the switch process?

Should i wait for any relevant information to come in the post or register for internet banking and try to restart that way?

Thanks

YorkshireBoy

VladDracula wrote: »

Does the switching process to First Direct in which you get £100 have to begin during account application?

No. As per the offer T&Cs...

Open a 1st Account, then transfer your banking and salary/income of at least £1,000 per month to your 1st Account using the Current Account Switch Service within three months of your account opening and we'll add £100 to your account.


http://discover.firstdirect.com/1staccount?WT.ac=MSC1667 (amongst many references)

...you've 3 months in which to complete the switch.

innovate

It is always best to wait with a switch request until you have your new account fully open, complete with Internet access, debit card and PIN number. Otherwise you could find yourself stranded with your old account closed and the new one not usable yet.

YorkshireBoy

innovate wrote: »

It is always best to wait with a switch request until you have your new account fully open, complete with Internet access, debit card and PIN number. Otherwise you could find yourself stranded with your old account closed and the new one not usable yet.

Good advice. Indeed, some providers (Co-op is one, based on my recent experience) won't initiate the switch until they've had chance to send you the card/PIN etc. Seem to remember they told me 7-10 days from application.


Another reason for holding off with the switch is when you're looking for an overdraft to match an existing facility on the other account. Many reports on here from people who finished up having to negotiate payment terms with the old provider because they couldn't stop the switch once initiated AFTER they found out their overdraft facility wasn't adequate on the new account.

rb10

Also note that as your wife is a non-taxpayer, she can claim back £2.50 per month from the Halifax Reward account (it's £7.50 gross, £5 net). The extra £2.50 needs to be claimed from HMRC using an R40 form.

You could get more than the £233 (and much more in the longer term), by doing this ...

Switch Barclays -> Halifax for £100 + £7.50 (gross) per month = £130
Switch Co-op -> Halifax for another £100 + £4.50 per month (they'll pay it as £5 but as a higher-rate taxpayer you'll have to pay the excess to HMRC) = £118
Switch HSBC -> Santander for £15 per month less £2 fee = £52

Total = £300

This way you also continue to get the Reward from Halifax - once you've taken the £100 switching bonus, First Direct won't give you anything else (unless you're interested in their Regular Saver account). It is reputedly very difficult to get them to actually pay up on the £100 for leaving.

Archi_Bald

How do you calculate £2.50 a month for Halifax? I make it £1.25 only.