5% Savings Loophole

Eco_Miser

HUMBUG wrote: »

Isn't it only a matter of time before all these banks get together and secretly agree some ploy to stop us moving money around various accounts (ie. via standing orders).

Emphasis mine.
That would be illegal, and the banks wouldn't do anything illegal, would they?

HUMBUG

I remember when NSANDI were offering some wonderful rates for index linked certificates (I think), the banks started throwing their toys out of the pram. Too many people were moving their money out of their bank accounts and within a few days the nsandi offer was removed. The same sort of little agreement between them and the government happened for premium bonds too. Just can't win when governments need money to refinance banks, from the only people who have it (ie. savers).

jimjames

HUMBUG wrote: »

I remember when NSANDI were offering some wonderful rates for index linked certificates (I think), the banks started throwing their toys out of the pram. Too many people were moving their money out of their bank accounts and within a few days the nsandi offer was removed. The same sort of little agreement between them and the government happened for premium bonds too. Just can't win when governments need money to refinance banks, from the only people who have it (ie. savers).

I'm not sure what you're alleging but I don't think any such agreement exists. NSI have limited funding so only offer accounts for limited periods so don't fully compete with banks.

You can get 5% from a bank and just over 1% from premium bonds, that doesn't sound to me like banks forcing them to drop.

Far more that the rate has dropped because the base rate has been at 0.5% for so long. Premium bonds have never historically been offering 3x base rate or 1% above base so hardly surprising that the rate has come down.

LXdaddy

Of course the banks are aware that a number of people like us use the current accounts as savings accounts and simply shuffle the same cash around in a circle. They will have statistics on how many accounts recieve the same minimum amount every month and that same goes out again within the month.

They can't get together and agree to stop playing the game because that would be illegal But one of them will blink first when tehy decide they have enough of the accounts and then others will follow.

But if more than 1% of the accounts are held by people like us I would be surprised. The vast majority of people don't have more than one or perhaps two current accounts. Some people have NEVER changed their current account.

If the comparatively good interest rates do come to an end we will find somewhere else to put our funds. While they continue to be available we should make best use of them.

YorkshireBoy

LXdaddy wrote: »

...one of them will blink first when tehy decide they have enough of the accounts and then others will follow.

I don't think so. Look at RBS/NatWest credit cards...how many other banks have followed suit and withdrawn their 0% deals over the latter part of last year? Answer...none!

The opportunity to cross sell other products is far too great for the banks to stop incentivising us to switch (either with switching incentives or in-credit interest), and I can see both being around for a good while yet...and expect others not currently participating (eg HSBC, Barclays, etc) to join the party, rather than the party being cancelled.

RateHunter

Have opened 3 x BOS, 2 x Nationwide Flex Direct (1 Joint), 2 x Tesco, 1 x TSB Classic. Final a/c's to open , 2 x TSB Classic - I opened 1 in my name but I cannot seem to open the final one as a joint a/c - Anyone else experience this? Seems I may have to open one in my wife's name (as the site says having applied for one, you cannot apply for another in your own name) and then later apply to have my name appended to turn it into a joint account?
Strange as I didn't have a problem opening a Joint N/W account.

YorkshireBoy

RateHunter wrote: »

Have opened 3 x BOS, 2 x Nationwide Flex Direct (1 Joint), 2 x Tesco, 1 x TSB Classic. Final a/c's to open , 2 x TSB Classic - I opened 1 in my name but I cannot seem to open the final one as a joint a/c - Anyone else experience this? Seems I may have to open one in my wife's name (as the site says having applied for one, you cannot apply for another in your own name) and then later apply to have my name appended to turn it into a joint account?
Strange as I didn't have a problem opening a Joint N/W account.

Not so strange when you read what it says on their website about joint accounts, ie you have to visit branch...both of you.


Having said that, I'm sure someone here said they managed to open a joint on the phone so maybe that's an option.

Yorkynige

Hi,
This is my first post, please be gentle with me! On the website '5% savings loophole' it gives an example of earning 4% from investing £30,000 in 9 accounts but I cannot see how 4% is earned, as £21,000 is earning 3% and only £9,000 is earning 5%. At the moment I am setting up a system like this for my pension lump sum and even with my wife having interest at gross I cannot get neat to 4%. Thanks for any info on this.
Nige

YorkshireBoy

Yorkynige wrote: »

Hi,
This is my first post, please be gentle with me! On the website '5% savings loophole' it gives an example of earning 4% from investing £30,000 in 9 accounts but I cannot see how 4% is earned, as £21,000 is earning 3% and only £9,000 is earning 5%. At the moment I am setting up a system like this for my pension lump sum and even with my wife having interest at gross I cannot get neat to 4%. Thanks for any info on this.
Nige

It's a shocking article isn't it!?

Reading very much between the lines the "over 4% on up to £15,000" comes from:

2 x TSB
2 x N/W FD
2 x Tesco

So £9K at 5% and £6K at 3%.

But you'd need to share a TSB and a N/W because you're only allowed 1 sole account with those.

And then there's the SO process that seems to take forever!

And then...well I won't trash it any more.

The approach you should take (for two of you), and in order, is:

TSB x 3 for £6K @ 5% AER
N/W FD x 3 for £7.5K @ 5% AER
Club Lloyds x 3 for £15K @ 4% AER
BoS x 6 for £30K @ 3% AER
Tesco x 4 for £12K @ 3% AER
Santander x 3 for £60K @ 3% AER

That should equate to £130.5K

Move Santander, or at least one of them, higher up the list if you want to simplify things.

If you've less than this, then do your sums re the non-tax paying partner and apportion to maximise the interest.

St.Jimmy

Hi,

I have had a Santander 123 current account for almost a year now and currently have just under £20,000 in the account. About 3 weeks ago I opened a TSB account and currently have £2,000 in that. I have just opened a Nationwide account that I plan to put £2,500 from the Santander account in to. Next I am thinking about opening a Lloyds account and putting £5000 in it from the Santander account.

I don't know much about credit scores but I know that opening current accounts can effect my credit score so I was just wondering how badly opening these accounts can effect it? I'm 21 years old and don't plan on any big applications such as a mortgage for another few years so I'm hoping that opening these accounts now won't effect my score for long?