5% Savings Loophole

MSE_Amy

5% Savings Loophole guide.

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save4u

One way to minimize your initial outlay is to open two TSB accounts in your partners name and send the first £500 STO from your main external account, 'bounce' the £500 between each (you->partner->you->partner->you) and return it from the last account into your main account. It works perfectly for a 5% interest gain. Otherwise for no additional outlay use your £500 from your first TSB account (reducing it temporarily to £1500) into your main account and return it starting at step one above...it's called recycling!!

esmediaz

Great guide, except that having two FlexDirect accounts both with 5% interest seems only to be possible for join accounts...

Can I open more than one FlexDirect account?

You can open up to four Nationwide current accounts. However, under the terms and conditions of this account customers are only entitled to one promotional credit interest rate of 5% AER. The only permitted exception to receive more than one promotional rate is if the additional account is held in joint names.
Any additional FlexDirect accounts held will result in the credit interest rate being reduced from 5% to 1% within 3 working days of the account being opened. If you have previously held a FlexDirect account in the last 12 months, you will not be entitled to the introductory rate or offer under a new agreement and therefore you will receive the standard 1% AER interest rate.

(From Nationwide FAQ pages, sorry can't post a link)

eskbanker

esmediaz wrote: »

Great guide, except that having two FlexDirect accounts both with 5% interest seems only to be possible for join accounts...

Yes, this is referred to in the MSE article - the last column of the summary table ("How many can you have?") clearly states "2 (1 must be joint)" for FlexDirect, which is correct and consistent with your extract from the Nationwide site.

hcpratchett

Hi Guys,

I'm new to MSE and I'm probably being a bit thick, but I wanted to clarify something about the accounts that require say £500 to be paid in each month, does that £500 have to stay in there for a certain amount of time?

I know in the article it said move it in and straight back out again, but I just wanted to double check in case I had misunderstood!

Thanks

Hannah x

Reaper

hcpratchett wrote: »

I'm new to MSE and I'm probably being a bit thick, but I wanted to clarify something about the accounts that require say £500 to be paid in each month, does that £500 have to stay in there for a certain amount of time?

I know in the article it said move it in and straight back out again, but I just wanted to double check in case I had misunderstood!

The article is right. Just moving it in and straight out again is sufficient.

Reaper

The article says:

Hang on a minute... you always say to max out a cash NISA before any other type of savings. Aren't you changing your tune? No, we're just getting creative. You've got your £15,000 cash NISA allowance to use by 5 April 2015 when the current tax year ends, but as long as current account interest rates after tax trump cash NISA rates (which most do), the money is better off there for the short term.

Annual ISA limits are now so high that only the wealthy need worry much about them. If bank accounts pay more interest after tax I suggest most people would be better off using these before resorting to ISAs, not just for the short term.

meggieb

Thanks for highlighting this loophole, it takes a bit of time and patience to set it all up but now reaping the rewards. Just had notification of reduction in interest on my original savings account so I feel even better about it.

calcotti

I am currently living off savings with no earned or benefit income having chosen to do unpaid voluntary work for the timebeing. Wanted to improve my returns by taking out a Classic Plus account to get the 5% interest on £2,000. Am quite capable of making monthly deposits of £500 from other savings. Since this is the only operating requirement and if I don't make the deposit it's my loss as I wouldn't get the interest there is no risk to the bank but they have tuned me down. Although they would let me have the ordinary Classic account (which of course is of no interest to me as it does have the interest).

Very helpful and pleasant staff in the complaints department but the decision by the relevant department appears completely illogical (think it was the lending department which in itself is daft as I am not asking for a loan or overdraft!).

TSB - the bank that likes to say no! Not so different after all.

colsten

Duplicate of your post in this thread, calcotti. No need to post things twice as people will read threads on more than one board.

riteofreply

"So let's imagine you want to open two Nationwide FlexDirect*, two Tesco Bank and two TSB Classic Plus accounts to earn over 4% on up to £19,000"

I must be doing the sums wrong, but using the example quoted I make the amount you can save to be £14,000?