Savings Advice

trenchwars

I am trying to sort out my Father's savings so he gets a reasonable rate of return.

He has about £10k in a matured ISA earning 0.5%.

He has about £20k in an instant access account earning 1.3% after tax.

He also has two Santander 123 current accounts with about £15k in each.

He has not used any ISA allowance for this year.

I was thinking the following:

(a) Transfer the ISA to the Santander 123 2 year ISA at 2%.
(b) Put £15k from the instant access into a Coventry 4 year ISA at 2.75%.
(c) Put the remaining £5k into the Santander current accounts.

Both of the fixed rate ISAs have a 120 day closure penalty which isn't too bad if a better rate comes along or he needs access to the money.

Anyone come up with anything better? Is it worth waiting to see if DotCommunity re-open their 3% ISA.

Archi_Bald

What tax band is your father in?

Presumably you/he want to stay all cash (no investments)?

Archi_Bald

trenchwars wrote: »

Is it worth waiting to see if DotCommunity re-open their 3% ISA.

Who knows. I have an invitation, dated June 30, to their AGM on July 25. It came with a glossy ISA flyer, advertising their 3%, 3.25% and 3.75% ISAs. No mention of transfers in, which may be deliberate or accidental.

The letter also states "Following the AGM, the Credit Union should be in a position to offer additional accounts earning interest, all protected by FSCS".

There isn't an agenda in the letter, so it's anybody's guess what, if anything, the AGM will decide about ISAs. Suppose it is a matter of waiting.

My barge isn't very far from Bournemouth, might go to the AGM if I feel like it on the day.

jimjames

trenchwars wrote: »

I was thinking the following:

(a) Transfer the ISA to the Santander 123 2 year ISA at 2%.
(b) Put £15k from the instant access into a Coventry 4 year ISA at 2.75%.
(c) Put the remaining £5k into the Santander current accounts.

Any reason you've not chosen to put the money in 5% and 4% current accounts rather than ISAs? That would take £11,500 I believe.

trenchwars

He is a basic rate tax payer. I think because of his age (late 70s) it would be better to stick with cash.

trenchwars

jimjames wrote: »

Any reason you've not chosen to put the money in 5% and 4% current accounts rather than ISAs? That would take £11,500 I believe.

I didn't really want to spread his money around too many accounts and none of the other interest-bearing current accounts really match the amount that Santander pays interest on.

Archi_Bald

Sounds definitely worth then to go for the higher rate current accounts, and also a Halifax Reward. See table in http://www.moneysavingexpert.com/savings/savings-loophole

If you add 3 x BOS Vantage, 3% AER, £5K each, you can put over £50,000 into those current accounts. So only a small amount needs to go into ISAs - but if you/he are happy to lock money up for 4 years or so, the Coventry ISA might make sense. May be do hold fire for a couple of weeks, as the CDU flyer talks about 3.25% AER for 3 years and 3.75% AER for 5 years (apart from the 3% 1 year one).

Archi_Bald

trenchwars wrote: »

P.S. Am I correct that you can only have at most 2 Santander 123 accounts?

1 sole, 1 joint max now

Archi_Bald

trenchwars wrote: »

I didn't really want to spread his money around too many accounts and none of the other interest-bearing current accounts really match the amount that Santander pays interest on.

Yeah but they pay a lot more interest on over half the amount a 123 takes

• 5% AER after BR tax = 4% net
• 4% AER after BR tax = 3.2% net
• 3% AER after BR tax = 2.4% net (and remember there is a £2/mth charge on 123)

• £11,500 in a 123 = £276 interest (may be only £252)
• £11,500 in TSB, Nationwide and Lloyds = £428 interest

Also, you could dripfeed into regular savers - FD and Club Lloyds for some extra money.
http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#savingscalc