What's the catch with playing the current account game?

MarkFromCornwall

moxter wrote: »

I'd be interested in other people's thoughts.

I can understand your point of view but for me it's worth the effort. Obsessive chasing of interest rates and other money saving strategies allowed me to three-quarters retire many years earlier than most people.

bowlhead99

MarkFromMullion wrote: »

I can understand your point of view but for me it's worth the effort. Obsessive chasing of interest rates and other money saving strategies allowed me to three-quarters retire many years earlier than most people.

You're not alone (although I'm not in the obsessive camp myself).

There's many ways to save a few hundred pounds a year here and there which with the power of compound interest will make a big difference to your 'retiring power' if you do it religiously throughout a couple of decades of working life. Some of them are appealing and achievable, others not.

For example someone spending £2 on a morning coffee on his commute for 240 workdays a year, might think of cutting them out to save £480 a year. And that chunk of cash will double for every decade that it sits in a shares-based investment, and he'll have a lot of years of coffee money stacked up if he does it from age 30 to age 50.

But some people don't do that because they can't bear the thought of going without that coffee.

But maybe they could just do coffee every other day. Monday, Wednesday, Friday one week, Tuesday Thursday the next. Maybe not a massive hardship. But then you only save £240 a year and retirement is going to be a longer time coming. Hmmm.

Well, if you have £20k in an ISA at 1.2% and you simply set up some direct debits to allow you to use a 3% current account instead, delivering 2.4% net, you've made the other £240 extra per year and you can still save a total of £480 a year for retirement while only giving up half the coffee.

tell_it_how_it_is

I decided to open a second 123 account, and took all my money out of various non-fixed-rate ISAs to move it into the pair of them. Felt like a no-brainer to me for £30k+ (and defo not higher-rate man lol).

However, I have to admit I can't be a**ed opening a dozen current accounts and regularly shifting money between them to earn a few extra quid on top.

oldfella

badger09 wrote: »

oldfella, you might want to think again about cutting up 'superfluous' debit cards. If you ever decide to switch accounts in future, you'll almost certainly be asked for your debit card number from the switched account.

I'm rather late to the switching party so have only just found this out. Ordering a debit card (which I'd declined when I opened the now defunct account) will delay my switch - and my switching bonus, by at least a week

its a good point. I had this problem with a switch, just rang the bank and told them to cancel the card. Better that than have a lot of unused cards around.

ossie48

Ive just started playing this game after receiving a lump sum and my advice is to take things easy.

My own bank Barclays have been awful in releasing funds.

Ive run into a few more issues. Santander have been brilliant. Likewise TSB, even though we are new customers - 4 accounts, no problem.

Nationwide have been a nightmare, asking us to go to a branch with ID, the branch not knowing what to do with it and then giving us wrong advice on the amount of accounts we can have. Their call centre hasn't been much better and we still cant access the accounts online over a week afterwards yet TSB was within days.

I havent tried Lloyds yet but will in due course.

It can be overwhelming at first but im sure things will settle down.

mgarl10024

I'd say that the only negative was the amount of paperwork. I know some people say 30mins a month, but with around 15 accounts I'm easily exceeding that.

In general, I roll the "current account" game into the "being financially savvy" game - shopping around for the best savings, best insurance, best utility providers...

Real rough calcs (as I've never worked it out thoroughly)...

The "current account" game probably means a couple of hours a month (let's say 25hr/yr). Some send statements, some send new cards, some send changes to terms and conditions, then one of them screws up and I send a complaint letter and there's a flurry of responses.

On top of that, chasing the best savings accounts, credit cards, utility providers, insurers, etc. takes about an hour or two each one. With a car, home, business and a BTL property, I reckon there's about 30 in total. That's 60hrs.

25hrs + 60hrs = 85hrs. Let's say 100hrs to make the maths easy.

Overall, I reckon that swapping everything about saves/makes on average around £2000.

£2000 / 100hrs = £20/hr. I'd work for that.

moxter

Interesting responses. Does seem it's like a "horses for courses" situation. I can understand why people with a large amount in cash would feel it was worth making the extra effort, as the difference per year could be in the thousands potentially, before allowing for compound interest. A little pain (or rather, organisation, I suppose) would be worth it. For smaller amounts I guess it boils down to whether spreading things around over many accounts with the associated rules and paperwork, is worth an uplift in a couple of hundred quid a year or less.

Thanks for all the opinions though, and at least I didn't seem to be missing anything particularly obvious. My money's staying in its pitiful ISA for the moment though!

nelinuk

Apropos of this, it got me looking online as to whether I could get a better deal than my 1.7% gross ISA.

Please someone tell me if I have worked this out correctly or not.

Santander - 3% on balance of (say) £3,000 = £90 for the year gross.

I am a higher rate taxpayer so £90 x .6 = £54 for the year net.

£54 less £2 monthly fee = £30 for the year net. Which is effectively only 1% on the original £3,000.

Any comments welcomed! Thanks

(I appreciate Santander has the cashback component, but I wanted to make sure I was working the interest out correctly.)

YorkshireBoy

nelinuk wrote: »

Apropos of this, it got me looking online as to whether I could get a better deal than my 1.7% gross ISA.

Please someone tell me if I have worked this out correctly or not.

Santander - 3% on balance of (say) £3,000 = £90 for the year gross.

I am a higher rate taxpayer so £90 x .6 = £54 for the year net.

£54 less £2 monthly fee = £30 for the year net. Which is effectively only 1% on the original £3,000.

Any comments welcomed! Thanks

(I appreciate Santander has the cashback component, but I wanted to make sure I was working the interest out correctly.)

Your calcs look OK to me, but if you only had £3K there are better places for it than Santander. By all means exploit them for the cashback, but stick your £3K savings in a brace of (£500 monthly by SO) cross-funded TSB Plus accounts. Interest alone would be £90 net of higher rate tax (ie 3 times what Santander would pay after the fees have been deducted). And best of all, you don't need to do anything after setting up the SOs.

planteria

oldfella wrote: »

15-20 accounts.

No problem.

fair play. i have 2 'proper' personal current accounts, and then use 6 for Rates/Rewards. certainly happy with the 'hassle' to access better deals.

i would be interested to know how oldfella's 'portfolio' looks:)