Advice on ISAs, credit cards etc etc.

Duane...

Hi all,

Need some advice re: the above.

I've just started my first job out of uni. 2 queries - what to do with savings, and how to do day-to-day transactions.

I currently have a Natwest Graduate account, which gives me a £2k interest free overdraft for 1 year, and £1k for the second year.

1. I have to pay my parents back around £5k, but it does not have to be paid back in instalments, or in a particular rush (I'd like to do it well within 2 years though).
I plan to "save" up £500 each month from my pay, to either go to my parents, or to go towards holidays etc - normally going towards parents though of course.

I would just stick the £500/month in an ISA, let that get a bit of interest, and then pay my parents back from that when I have saved enough. However, I know I will want to dip into the account at least a couple times a year (holidays etc), so not sure an ISA will work. Are there any other ISA-like accounts with reasonable interest rates, which allow me to withdraw from it?

I guess one option would be to keep an amount in my "normal" account so that I never need to dip into the ISA, but would rather keep all my "savings" in one place..

2. I have my Natwest Graduate account (which also comes with a credit card) - but are there better options for day to day spending, with cash back etc? I may as well max out the overdraft of the Graduate account while it's interest free, and put it wherever I put the savings.

So, any thoughts on the best way to do things? Any thoughts would be much appreciated!

Or.... Just use my existing Natwest account and be done with it...?

Thanks,
Duane.

grumbler

Duane... wrote: »

...
1. I have to pay my parents back around £5k, ...
I would just stick the £500/month in an ISA, let that get a bit of interest, and then pay my parents back from that when I have saved enough.

If your parents don't insist on getting money back ASAP, this doesn't mean that it's morally right to earn interest on money that you borrowed from them for free.

However, I know I will want to dip into the account at least a couple times a year (holidays etc), so not sure an ISA will work. Are there any other ISA-like accounts with reasonable interest rates, which allow me to withdraw from it?

In fact ATM easy-access ISAs are not competitive for both short-term and long-term savings. For £500 p.m. you can do much better with regular savings accounts or even with some current accounts. See MSE articles:

• Top Savings Accounts
• Regular Savings
• Cash NISAs

2. I have my Natwest Graduate account (which also comes with a credit card) - but are there better options for day to day spending, with cash back etc?

• Cashback Credit Cards
• Credit Card Rewards

I may as well max out the overdraft of the Graduate account while it's interest free, and put it wherever I put the savings.

You may, although Natwest may not like this..

Duane...

Thanks for the quick reply, will look into the links.

Regarding my parents - I have told them the plan and they are fine with it.

Regarding Natwest, maybe not, but it's been nearly maxed out for 5 years (as a student) and they didn't seem to mind!

jimjames

ISAs are completely pointless for most people with under £5k of savings despite what the MSE articles claim.

You can get 5% on TSB current accounts up to £4000, that's way more than any ISA.

jayjay21

Duane... wrote: »

Regarding Natwest, maybe not, but it's been nearly maxed out for 5 years (as a student) and they didn't seem to mind!

Perhaps not, but I also imagine they didn't mind the fact you had regular activity on the account.

I'm guessing you're not going to have any income paid into this account now? Prolonged periods of inactivity and being 'maxed out' would lead to potential withdrawal of the facility.

Duane...

Thanks for the replies.

Good point re: inactive Natwest account. I think I'll just stick with my Natwest Graduate account for now, for day to day use, and slowly reduce the overdraft over the next couple years.

I would like to have some kind of seperate account for sticking savings in each month. The Natwest Instant Saver has a very low interest rate (0.4%) - so could I use the TSB Current Plus account mentioned above which gives 5% on £2000 (can't find anywhere stating £4000?) - as long as I can put in £500 per month.

How strict are they on the £500/month? If I paid in on say 15th September, 14th October, 16th November, would they be unhappy as technically that is a month with no money put in?


Thanks,
Duane.

Fruit_and_Nut_Case

Duane... wrote: »

Thanks for the replies.

Good point re: inactive Natwest account. I think I'll just stick with my Natwest Graduate account for now, for day to day use, and slowly reduce the overdraft over the next couple years.

I would like to have some kind of seperate account for sticking savings in each month. The Natwest Instant Saver has a very low interest rate (0.4%) - so could I use the TSB Current Plus account mentioned above which gives 5% on £2000 (can't find anywhere stating £4000?) - as long as I can put in £500 per month.

How strict are they on the £500/month? If I paid in on say 15th September, 14th October, 16th November, would they be unhappy as technically that is a month with no money put in?


Thanks,
Duane.

• The £4000 is achieved by having two accounts
• The £500 doesn't need to stay in; you can take it out right away, and it's per calendar month.

Duane...

Are they quite happy with you having two accounts?

grumbler

Duane... wrote: »

Are they quite happy with you having two accounts?

• Best Bank Accounts

>> TSB Classic Plus