Maxed out ISAs and Santander 123

adaminvests

Hi all,

I'm currently 23 and still live with my parents. I don't have many expenses after rent, gym membership, petrol etc. so have managed to build up quite a substantial savings without having a great wage. I'm preparing to move out in the next year or so, so want to get all my savings sorted first.

I currently have two bank accounts:

Santander 123 3% - £27,400 (Current interest paid after tax per month is £38.93 which doesn't seem right to me but i've no idea how to work out what it should be)
Virgin ISA - £14,900 (2.4 gross interest 3 year ISA)

Total - £42,300

My wage (£1,116.93/month) is paid directly into my Santander account. Also, I should have around £3,500 being paid into my account over the next few months because I loaned someone some money and they can finally pay it back.

I realise the 3% interest on the 123 account only applies to the first £20,000. Does anyone have any suggestions as to what I can do with the extra? I have already used my ISA this year.

Also, is the credit card worth getting on the 123 account? I spend £20-30 on petrol each week.

Thanks,
Adam

Archi_Bald

There are plenty of other current accounts that pay good interest - TSB PLus, Club Lloyds, Tesco, BOS Vantage. Plus there are the First Direct and Club Lloyds monthly saver accounts that you can exploit if you don't need your money for a year. All a great deal better than leaving £7K lingering at 0%! As you appear to have a good credit record, it shouldn't be difficult to get approved for other current accounts.

adaminvests wrote: »

Also, is the credit card worth getting on the 123 account? I spend £20-30 on petrol each week.

Use the calculator on the Santander website. If all you'd spend on it is £80 - 120 petrol a month, you'd probably just about scrape the monthly fee together. First year is free though.

Working out interest payments: banks calculate the interest daily, based on balance in account at the end of the day, using the gross interest rate.

E.g. Santander, £20K in account each day, gross rate 2.96%, 31 days in month:

• (20,000 *2.96%) / 365 * 31 = £50.27 before tax.
• 20% tax is automatically withheld ==> you get paid £40.21

EDIT: Find the thread about Halifax Reward. With the amount of money you have, you should be able to pocket the monthly fiver without much effort.

EDIT2: Of course you shouldn't necessarily just hold all your money in cash. Are you contributing to a work's pension, can you increase your contribution by, say, £50 a month? Can you start an S&S ISA (7 - 10 years commitment)?