£21,000 Santander 123 or split Accounts?

bettz

Hi I'm after some advice for a friend,she's currently saving for a deposit for a house and has £21,000 in a Natwest account and gets around £12 a month in interest

What would be the best option open a Santander 123 account and stick all the £20,000 in 3% interest per month £592 a year so would that net £49 a month?

Or split the money

4% Club Lloyds £5,000

5% 2 x Tsb Plus accounts £4,000

3% £12,000 in a santander 123 account?

Archi_Bald

Isn't it a simple question of maths? Plus Santander pay interest on £20K max.

You also need to take 20% tax off the interest payments. But current accounts are the best places interest-wise at present.

Don't forget FlexDirect, Halifax Reward, and may be also some monthly savers.

Littlemeezer

Has to be Santander, one of the best interest paying current accounts at this present time. £20,000 will earn you 2.4% after tax, that's at 3%. Paid monthly and they deduct the tax. Most of us have DD's and you only need two to open this account, even the £24 yearly fee still makes it worth having an account, and don't forget your cash backs. Over all a great account, for the time being at least.

anoncol

Is maths that hard?

colsten

Littlemeezer wrote: »

Has to be Santander, one of the best interest paying current accounts at this present time.

The best interest paying current accounts at this present time pay 4% and 5% and do not have a monthly fee / the fee can easily be avoided. There are also 3% accounts without a monthly fee / for which the monthly fee can easily be avoided. These accounts take over £30K between them.

Granted, you need a number of them - but then you can't get interest in Santander for £21K so you needed at least one other account anyway. For somebody saving for a deposit, I would have thought every penny counts and it would be a bit silly to choose the account that pays the least of all the interest paying current accounts as their preferred account.

Eco_Miser

The TSB accounts pay 2% more than the Santander account, that's £80 a year (less a bit because the accounts are full therefore no compounding), and less £16 if basic rate tax is payable. So yes, split over many accounts.

Consumerist

bettz wrote: »

Hi I'm after some advice for a friend,she's currently saving for a deposit for a house and has £21,000 in a Natwest account and gets around £12 a month in interest

According to my arithmetic that's £15 pm gross (£180 pa) interest on £21,000 which works out at about 0.85% gross pa. As already mentioned, that rate is easily beatable in other accounts.

If your friend is saving for a mortgage, they might want to consider whether putting some of their savings with a potential mortgage lender might help to get the mortgage when the time comes.

planteria

it's just about the rates.
fwiw i am maxing Nationwide FlexDirect for 5% on £2500.
and then i use S123 for a larger chunk.
and haven't bothered with Lloyds or TSB so far.
but i have 8 personal current accounts already...don't really have a need to complicate things further:)

Archi_Bald

planteria wrote: »

it's just about the rates.

quite.

planteria wrote: »

and haven't bothered with Lloyds or TSB so far.

So it isn't just about rates, after all? Ignoring any compounding, £10,000 in a 123 yields £296 before tax, whilst the same £10,000 in TSB and Lloyds yields £441 before tax. Would you walk past £145 in the street because it is too hard to bend down to pick it up?

planteria wrote: »

i have 8 personal current accounts already

there are quite a few people on here who have more than twice that number

YorkshireBoy

Archi_Bald wrote: »

Ignoring any compounding, £10,000 in a 123 yields £296 before tax, whilst the same £10,000 in TSB and Lloyds yields £441 before tax.

Agree with the gist of your post, but I make it £392.10 gross on £9K (the max you could get in a Club Lloyds and 2 x TSB Plus for interest earning purposes).

Archi_Bald

Oh my, I was getting a bit carried away there thinking TSB Plus is £2,500 each...must be the heat frying my brain

Still a difference of £127.70 before tax on £9K.