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

nelinuk

jimjames wrote: »

For £3000 then 2x tsb makes more sense at 5%. Add in a Halifax account giving £75 pa before tax and at £225 you've got a far better return than 1.7% tax free.

The £3k was an exemplary figure for the sake of the sums. I actually have £9k in the ISA, c £2,600 of which has been deposited this year.


Would the advice be to close the SA for the TSB / Nationwide etc juggling act?


Thanks again

YorkshireBoy

nelinuk wrote: »

Would the advice be to close the SA for the TSB / Nationwide etc juggling act?

I wouldn't close the ISA...I'd remove all but £1 (or whatever minimum balance was required) and get it into the 4% and 5% current accounts...especially since the annual ISA limit is now £15K. If, and it's a big if, ISA rates do increase significantly over the next 6-8 months you can put it all back in again. It's heads you win, and tails you don't lose!

nelinuk

YorkshireBoy wrote: »

I wouldn't close the ISA...I'd remove all but £1 (or whatever minimum balance was required) and get it into the 4% and 5% current accounts...especially since the annual ISA limit is now £15K. If, and it's a big if, ISA rates do increase significantly over the next 6-8 months you can put it all back in again. It's heads you win, and tails you don't lose!

Thanks again YB! Appreciate you taking the time. Really need to start putting a bit more effort into this, so good to get some nice clear advice.

loonytunes123

This makes sense. I have 50k, and max it the same way as Archibald. Anyone with a decent amount who basically " can't be bothered" with the hassle of maximising their savings, is in my opinion, very stupid. As the poster says, there is actually no hassle involved after the initial up front set ups.

MarkFromCornwall

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.)

The fee is a fixed amount. Therefore to get best value from Santander 123 you need to put in as much as possible. If you re-run your calculation with £20,000 then 3% gross is £600, multiply by .6 is £360, subtract the fee is £336, which is 1.68% on the original £20,000 (plus there's the cashback).

YorkshireBoy

MarkFromMullion wrote: »

The fee is a fixed amount. Therefore to get best value from Santander 123 you need to put in as much as possible. If you re-run your calculation with £20,000 then 3% gross is £600, multiply by .6 is £360, subtract the fee is £336, which is 1.68% on the original £20,000 (plus there's the cashback).

A useful illustration, but if you're filling the account with £20K there's no compounding benefit so you'd have to use 2.96% gross p.a.

Won't make a lot of difference (£8 or so) but might save someone asking why they didn't get £600 over the year.

System

Moxter
I tend to agree with your sentiments re the current accounts.
I have one with Nationwide that works fine with me. I have a cash ISA, a S&S ISA (Different provider), a regular savings account and some premium bonds. I have 3 credit cards all with zero balances and if I ever use them pay off in full each month. Pension is also sorted. I find it all hassle free.
I do enjoy reading all of these forums but I have to remember we are only talking about money. As I have said elsewhere quality use of time on interests and with family and friends are the most important things to me.
As for obsession of some about retiring early on x amount of money! I actually enjoy my job and I am quite happy to carry on until I am 60 (4 years away). I would like to think if I hated my job that much I would simply do something else.
I do feel that some people on here need to remember that we do not know what is around the corner. You may have a great pension, lots of savings etc... then along comes that bus or illness. Yes be sensible, but remember to live too.


V.

Eco_Miser

excelpaul wrote: »

As for obsession of some about retiring early on x amount of money! I actually enjoy my job and I am quite happy to carry on until I am 60 (4 years away).

But retirement at 60 is early retirement!

Rollinghome

MarkFromMullion wrote: »

(plus there's the cashback).

Indeed there is.

For example I'm paid £86.70 a year by Santander as "cashback", almost 4 times the £24 fee you deduct, so without an allowance for that in your calculations, rather than just mentioning in parentheses, does the precise figure to two decimal points have much validity? (My figure would be higher if I switched other bills to DD but they can be paid by CC which also pays cashback.)

I've some sympathy for the thrust of Moxter's argument particularly for those in work and able to boost their income, perhaps like himself. There are lots of opportunities to grab a few pounds that look like far too much hassle for me.

However, it may be viewed quite differently for those who can't work or are retired. For them, every opportunity to boost a fixed income may be very important.

I'd also point out that a couple could put around £120,000 or more into the various high interest current accounts as a number of people on this board alone will have done. An average of maybe 2.5% extra interest on a large sum will make a huge difference for someone with a meagre pension - £3000 pa gross on £120,000.

There are of course people who make a similarly valid point to the one Moxter has made in saying, why bother to invest when they can earn a bit of interest by keeping their cash in the bank with no worry.

It's all a matter of choice which will be influenced by the particular circumstances.

System

Eco Miser
My retirement may be early in terms of the state pension but my scheme has a pension age of 60 by which time I would have been working for 37 years as part of that scheme. I have actually worked part time as well through sixth and university for another 5 years so about 42 in total paying NI. So I think I have done my bit!
To be honest I see the State pension as a useful bonus payment from the age of 66 in my case. I do worry about those for whom it will their only source of income.


V.