5% Savings Loophole

Radaday

caveman38 wrote: »

I understand that the £1,000 monthly deposits BOS required can be from other BOS accounts. Can you simply set up SO from BOS 1 to 2, 2 to 3 and again back to 1 over say 3 days. Or are there more strict requirements for the funding.

I have the three BOS and just transfer the £1000 between them on the same day :j

Hal17

I have max'd out on all the High Interest Current Accounts for both my wife and I and have 8 monthly savers - 6 at 5% and 2 at 4%.

I have just realised that I need £2,900 every month to feed my monthly savers and was planning to take this from our cash ISA's which is paying 1.75% currently.

We are both non-tax payers so with the rule changes on savings interest I felt this was a good way forward. However, I have worked hard to build my cash free ISA over the years and need a mindset change - so was wondering if I have done the right thing, is the extra interest worth losing the tax free allowance on the ISA?

nushnush

Hal17 wrote: »

I have max'd out on all the High Interest Current Accounts for both my wife and I and have 8 monthly savers - 6 at 5% and 2 at 4%.

I have just realised that I need £2,900 every month to feed my monthly savers and was planning to take this from our cash ISA's which is paying 1.75% currently.

We are both non-tax payers so with the rule changes on savings interest I felt this was a good way forward. However, I have worked hard to build my cash free ISA over the years and need a mindset change - so was wondering if I have done the right thing, is the extra interest worth losing the tax free allowance on the ISA?

dont lose your tax free status, move your cash isa to a flexible isa then draw it to fund accounts, then refund your flex isa before next tax year. job done, i am just moving my cash isa to abundance to do exactly that.

Hal17

Thanks Nushnush thats a valid point.

Even if I didn't move my ISA to a Flex ISA, I have just read that the new ISA allowance for the next tax year is £20K per person, so after the monthly saver period is up we could move £40K back to our Cash ISA anyway - I had overlooked that simple point. I guess I am worrying over nothing. Cheers.

cabbage

HI

I looked at Martin's 5% loophole guide a few months ago and there was a link to someone's spreadsheet or chart detailing how this works in practice i.e. on day one i pay £500 into Santander and day X to Club Lloyds etc but I've lost the link. We've got about £60k to invest and to be honest it seems a bit of a hassle but the interest rate is attractive and I like the idea of spreading the money about so it's not all in one place.

we are already with nationwide but with a bog standard flex account. We are quite interested in the Santander 123 account x 3 (2 x single and 1 joint)

Can anyone help? or give a bit of advice of how this works in detailed terms.

fun4everyone

cabbage wrote: »

HI

I looked at Martin's 5% loophole guide a few months ago and there was a link to someone's spreadsheet or chart detailing how this works in practice i.e. on day one i pay £500 into Santander and day X to Club Lloyds etc but I've lost the link. We've got about £60k to invest and to be honest it seems a bit of a hassle but the interest rate is attractive and I like the idea of spreading the money about so it's not all in one place.

we are already with nationwide but with a bog standard flex account. We are quite interested in the Santander 123 account x 3 (2 x single and 1 joint)

Can anyone help? or give a bit of advice of how this works in detailed terms.

Looking at maxing the interest rate you could open three (one each and one joint) TSB which would make 6k @ 5%. Then the same for club Lloyds which would make 15k @ 4% and so on and so on. Nationwide do a 5%er as well you could get 3 of but the rate does stop after a year. Taking the regular savers out as well gives you more cash @ 5%. Max the 5% and 4% accounts before you move onto the 3% ones. Tesco are decent once you get down to opening the 3%ers - no money merry go round needed and you can each have two.


Santander 123 is good but maybe a bit overhyped. You should max out all the other higher interest paying accounts before you go there. Once you have a 123 put all the bills you can on it for the cashback . You can get a 5% regular saver at Santander as well.


The standing orders you can set up how you like. Many people like to just move the money in and out on the same day which is fine. Do note that Santander 123 count a month as starting from the day the account was opening, NOT the 1st. The rest count it as from the 1st. Bank of Scotland allow internal transfers to qualify for funding, I think the rest must be from an external source.


With a small amount of work, you should easily be able to get a nice rate going on the whole 60k.

YorkshireBoy

cabbage wrote: »

HI

I looked at Martin's 5% loophole guide a few months ago and there was a link to someone's spreadsheet or chart detailing how this works in practice i.e. on day one i pay £500 into Santander and day X to Club Lloyds etc but I've lost the link. We've got about £60k to invest and to be honest it seems a bit of a hassle but the interest rate is attractive and I like the idea of spreading the money about so it's not all in one place.

we are already with nationwide but with a bog standard flex account. We are quite interested in the Santander 123 account x 3 (2 x single and 1 joint)

Can anyone help? or give a bit of advice of how this works in detailed terms.

Why no Nationwide FlexDirect accounts for £7.5K of your money?

3 x Santander will mean £180 a year in fees! That'll take some covering with cashback generating DDs.

As a couple you could open:

3 x FlexDirect
3 x TSB Plus
3 x Club Lloyds
6 x BoS Vantage
Up to 4 x Tesco (you'd only need one for your £60K, as the above will take £58.5K)

Which would see you making a good bit more interest, plus saving you £180 a year in fees!

Re funding, you'd internally fund (same day) BoS. Likewise, TSB. Club Lloyds would fund Nationwide and vice versa. Tesco doesn't require any funding.

Scoop up all interest each month and use Tesco's spare capacity (the accounts above will take £70.5K and you only have £60K.

And then look at drip-feeding the 4% & 5% regular savers (from the 3% accounts) with TSB, Lloyds, & Nationwide.

saver861

YorkshireBoy wrote: »

Re funding, you'd internally fund (same day) BoS. Likewise, TSB. Club Lloyds would fund Nationwide and vice versa. Tesco doesn't require any funding.

While you can internally fund, I have mine all on round robin external funding, same day. It just protects from some small print change of policy where internal funding no longer applies.

True you could deal with it at the time if there was a change of policy, however if you are setting everything up from the outset then might as well fund them all externally same day.

fun4everyone

saver861 wrote: »

While you can internally fund, I have mine all on round robin external funding, same day. It just protects from some small print change of policy where internal funding no longer applies.

I do exactly the same.

cabbage

that is a very good point about the fees for Santander. Will definitely look at the fee free accounts.

many thanks

YorkshireBoy wrote: »

Why no Nationwide FlexDirect accounts for £7.5K of your money?

3 x Santander will mean £180 a year in fees! That'll take some covering with cashback generating DDs.

As a couple you could open:

3 x FlexDirect
3 x TSB Plus
3 x Club Lloyds
6 x BoS Vantage
Up to 4 x Tesco (you'd only need one for your £60K, as the above will take £58.5K)

Which would see you making a good bit more interest, plus saving you £180 a year in fees!

Re funding, you'd internally fund (same day) BoS. Likewise, TSB. Club Lloyds would fund Nationwide and vice versa. Tesco doesn't require any funding.

Scoop up all interest each month and use Tesco's spare capacity (the accounts above will take £70.5K and you only have £60K.

And then look at drip-feeding the 4% & 5% regular savers (from the 3% accounts) with TSB, Lloyds, & Nationwide.