getting organised

trailingspouse

Can someone check my logic here please?

OH and I have £36,000 which is spread between 2 Lloyds Vantage accounts and on Lloyds Premier Vantage account. We will be paying in a further £1600 per month in salary. We are basic rate tax payers, but at the top end of the scale so could stray into 40% later in the year.

We want to keep the money liquid, so not interested in ISA's or tying the money up in any other way at the moment.

My current (pardon the pun) thinking is -

Close off all the Vantage accounts, and then put £5000 into a Club Lloyds account, fulfilling the £1500 monthly deposit by paying in our £1600 salary. That would give us 4%. Open a Santander 123 account each, with £15,500 in each one, which would pay us 3%. We would fulfill the £500 monthly deposit by paying out of the Club Lloyds account. We would benefit from cashback on all the relevant direct debits with Santander, but have 2 direct debits paying out from the Club Lloyds account to fulfill their t&c's.

We would save £25 per month fees on the Premier Vantage account, but have to buy travel insurance, breakdown cover etc.

Assuming that we keep £5000 in the Club Lloyds account, and £15,500 in each Santander account, I see the figures working out something like this -

interest on Club Lloyds - £200
interest on 1st Santander account - £465
interest on 2nd Santander account - £465
savings on Premier Vantage fees - £25x12 £300
cashback (based on last year's spending) £ 70+

That would give us £1500 per annum.

From this, we'd have to deduct -

fees on 1st Santander account - £24
fees on 2nd Santander account - £24
cost of AA, travel ins etc - £205
tax on interest at 20%- £226

which is £479.

So in total we would be £1500 - £479 = £1021 better off.

Or can anyone think of a better plan of action?

jennifernil

I would be doing the following....

2 x TSB Classic Plus accounts each (total covered £8k @5%)

1 Club Lloyds account each (total covered (£10k@4%)

1 x Santander 123 account initally to cover up to £20k@3%. Add another as required.

There are also 4% monthly savers you can open with Club Lloyds. And you can earn 6% on First Direct monthly savers.

TSB and BOS also have "vantage" style accounts that are still paying 3% meantime.

bsms1147

Add in a Nationwide Flexplus;

- UK & European breakdown cover
- Worldwide mobile phone insurance
- Worldwide family travel insurance
- 12 month extended warranty

All for £10/month, rather than your '£205 a year' that you've allocted to replace the Premier Vantage, so you'll be £85 up on your calculations.

(Though you can offset this fee with 3% credit interest up to £2,500 so effectively all the above costs £60 a year).

bsms1147

jennifernil wrote: »

1 Club Lloyds account each (total covered (£10k@4%)

*2 accounts.

Also you can have 6 TSB Plus accounts as a couple, covering £12,000.

Nationwide Flexdirect for 5% on £2,500 should also be considered if you're after all the top-paying accounts.

will-he-payitoff

If you do open a 123 account get a credit card from santander and save 3% on your fuel and 1% on supermarket shopping.

bsms1147

will-he-payitoff wrote: »

If you do open a 123 account get a credit card from santander and save 3% on your fuel and 1% on supermarket shopping.

For many people the fees will outweigh the potential gains with the 123 credit card (though it would be free for the first year). Worth running the calculations though.

YorkshireBoy

jennifernil wrote: »

TSB and BOS also have "vantage" style accounts that are still paying 3% meantime.

Whilst BoS Vantage is still available, TSB Enhance was withdrawn (for new customers) a few weeks ago.

trailingspouse

I did look at the Nationwide FlexDirect account, but the 5% is only on £2500 and only for 12 months, and you have to pay in £1000 per month - so unless you pay it straight back out again you'd quickly exceed the limit and not earn anything on the extra.

I'm just going to check how many direct debits we actually have going out of our account, as I'm not sure there are enough to go round if we open a lot of accounts!! I'll be back!!

YorkshireBoy

bsms1147 wrote: »

Nationwide Flexdirect for 5% on £2,500 should also be considered if you're after all the top-paying accounts.

Since there are two of them, that's £7.5K at 5% AER for a year (with 2 sole and 1 joint).

YorkshireBoy

trailingspouse wrote: »

you have to pay in £1000 per month - so unless you pay it straight back out again you'd quickly exceed the limit and not earn anything on the extra.

Since many of your proposed accounts, and also those being suggested, require monthly funding - and because they'll always have a balance >£1K - just set up some standing orders...all for the same day each month. Job done!

bsms1147

trailingspouse wrote: »

I did look at the Nationwide FlexDirect account, but the 5% is only on £2500 and only for 12 months,

Still though, it's 5% (4% net) on £2,500 that would otherwise be earning 3% (2.4% net), and the differences soon add up. You could have three of them as a couple.

and you have to pay in £1000 per month - so unless you pay it straight back out again you'd quickly exceed the limit and not earn anything on the extra.

This is what most people do. Keep a flat £2,500 in there and automatically cycle £1,000 in and out by standing order. It takes zero effort.

I'm just going to check how many direct debits we actually have going out of our account, as I'm not sure there are enough to go round if we open a lot of accounts!! I'll be back!!

The Nationwide and TSB accounts require no Direct Debits, so even less of an obstacle to getting them. Saying that there are plenty of options for creating direct debits should you need more.

And Halifax Reward, another one worth considering two (?three) of (£60 each a year).