money to save and no idea what to do with it!

wallofbeans

Archi_Bald wrote: »

At current interest rates, cash ISAs are a total waste of time and money if you have got less than £51,500, and if you are planning to spend the money in the next 3-5 years. £51,500 is the amount you can spread across 3, 4 and 5% current accounts. In addition, you can also feed some Regular Savings accounts which pay 4 and 6% AER.

I've seen adds for the Santander 3% account for amounts between 3k - 20k.

What are the 4 & 5% current accounts?
And what's the catch??

Eco_Miser

Lloyds Club, TSB Classic Plus, Nationwide Flex Direct. Catches are relatively low limits, high monthly payment for Lloyds, totally paperless is required for TSB, Nationwide only lasts a year. Each account has at least one thread on this board, and on the banking board. Tesco and BOS also have 3% accounts.

wallofbeans

Eco_Miser wrote: »

Lloyds Club, TSB Classic Plus, Nationwide Flex Direct. Catches are relatively low limits, high monthly payment for Lloyds, totally paperless is required for TSB, Nationwide only lasts a year. Each account has at least one thread on this board, and on the banking board. Tesco and BOS also have 3% accounts.

Thanks for that. Very helpful as I start to investigate the options.

Can anyone give me tips on the 4% or 6% savings accounts also mentioned?

Thanks so much!

eskbanker

See http://www.moneysavingexpert.com/savings/savings-loophole for a briefing about the high-interest current accounts - as well as the catches mentioned above (limits, minimum monthly funding, etc), the other one to look out for is the requirement to set up direct debits coming out from many of them. Monthly minimums and DDs can be worked around relatively easily....

See also http://www.moneysavingexpert.com/savings/best-regular-savings-accounts

Eco_Miser

The regular savers are Lloyds Club (4%) which requires the matching current account, and First Direct (6%), which requires the FD current account, and (to avoid fees) at least £1 in an FD standard saver. Again, search this board for tips.

wallofbeans

So I think the Santander 123 account is a must. My HSBC current account gives me no interest on credit at all! The only plus is I have a decent overdraft facility and there is no monthly fee!

Should I transfer my entire HSBC account to the 123 account first and then figure out other options after that? (ie what other little chunks of cash I'll put where)... I'm thinking that the 123 account will be my new main account...
OR just transfer a healthy chunk from my HSBC account, along with two direct debits...

The only things I'm worried about are:

My freelance status means that every so often a month will go by and I'll get paid nothing... or I'll get paid late! If I don't pay in the £500 minimum one month then what happens..?

My regular freelance job (and main income) pays on the 10th of each month and is set up to go into my HSBC account. How long might it take to get this changed and should I wait until after the 10th to try and change it all over?
(this is a reason to keep the HSBC open I guess..?)

Should I ask for an overdraft (for emergency purposes) when I first open the account or later?

This HSBC account is the only one I've ever had so moving all this is new to me and all a little bit scary!

Thanks all!

Linton

wallofbeans wrote: »

.....

The only things I'm worried about are:

My freelance status means that every so often a month will go by and I'll get paid nothing... or I'll get paid late! If I don't pay in the £500 minimum one month then what happens..?

My regular freelance job (and main income) pays on the 10th of each month and is set up to go into my HSBC account. How long might it take to get this changed and should I wait until after the 10th to try and change it all over?
(this is a reason to keep the HSBC open I guess..?)

Should I ask for an overdraft (for emergency purposes) when I first open the account or later?

This HSBC account is the only one I've ever had so moving all this is new to me and all a little bit scary!

Thanks all!

Q1 and Q2)
I think you need to distinguish between your cash balance for emergencies/gaps in employment and that held for maximum return. The former must be immediately accessible no matter what the circumstances. This accessibility may well be at the expense of a decrease in total return.

Q3) You shouldnt plan on an overdraft or any other form of short term debt at all unless you can get it extremely cheaply.

wallofbeans

Linton wrote: »

Q1 and Q2)
I think you need to distinguish between your cash balance for emergencies/gaps in employment and that held for maximum return. The former must be immediately accessible no matter what the circumstances. This accessibility may well be at the expense of a decrease in total return.

Q3) You shouldnt plan on an overdraft or any other form of short term debt at all unless you can get it extremely cheaply.

Q1 & Q2 - Ok but the 123 account allows me to take the money out at any time, should I need it.

I would try and avoid that but the money might as well be in there for emergencies, right? Rather that, than let it sit in my 0% HSBC account.

Unless I'm missing something (quite likely) and there are better options?

I might move some to a harder to access savings account but the 123 is just a normal current account, isn't it?


Q3 - What other option is there, rather than overdraft should it come to it? It's better than a credit card. I've used both when I needed to previously. I don't think I'll need to go there again. I am credit card free now and haven't been near an overdraft in a long time. But having one there in case, is better than not having it at all, surely?

Linton

wallofbeans wrote: »

Q1 & Q2 - Ok but the 123 account allows me to take the money out at any time, should I need it.

I would try and avoid that but the money might as well be in there for emergencies, right? Rather that, than let it sit in my 0% HSBC account.

Unless I'm missing something (quite likely) and there are better options?

I might move some to a harder to access savings account but the 123 is just a normal current account, isn't it?


Q3 - What other option is there, rather than overdraft should it come to it? It's better than a credit card. I've used both when I needed to previously. I don't think I'll need to go there again. I am credit card free now and haven't been near an overdraft in a long time. But having one there in case, is better than not having it at all, surely?

Q1 & Q2 - my concern is that keeping within the rules of the 123 account to get maximum return may prevent you having real unfettered access to all the money.

Q3 - The other option is to plan your affairs including "what if" scenarios so that taking on short term debt is never necessary. It certainly should not be any part of your ongoing plan.

wallofbeans

Linton wrote: »

Q1 & Q2 - my concern is that keeping within the rules of the 123 account to get maximum return may prevent you having real unfettered access to all the money.

Q3 - The other option is to plan your affairs including "what if" scenarios so that taking on short term debt is never necessary. It certainly should not be any part of your ongoing plan.

Q1 & Q2 - AM I right in thinking the only rules are I have to pay in £500 a month and there's a £2 per month fee.

This is why I wanted to know what happens if i don't pay the £500 minimum every month.

At the moment, if my main job pay went directly into that account, it would be a lot more than £500 a month. I wondered if I should have my pay sent directly to another account and I just pay £500 into the 123. Or something?

I'm not sure how it stop me getting to that money if I needed it. If I'm allowed to take it and I needed to, then I wouldn't hesitate taking it. Even if I had 20k in there, 3% on it isn't that much that it would stop me taking the money should I really need it.

That's OK to do, isn't it? Worst case scenario, I could just take the money and close the account.

Q3 - It's interesting that you say that. I agree that it is extremely unlikely that it would ever be necessary. And I hope I have things set up, and I earn enough regularly enough, that it will not happen. But I could never say never about anything and am trying to figure out if setting up an overdraft for that worse case is possible/useful or even detrimental at this point in time.

Thanks for your feedback on all this. Very helpful to get your thoughts and hugely appreciated.