Best Interest Rates Missing on MSE?

jimjames

I was reading an article by Martin in the Telegraph

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/11212554/Moneysaving-mortgage-trick-pay-an-extra-150-per-month-now-save-30000.html

where he mentions that his "top pick savings rate is 3pc on up to £20,000 with the Santander 123 bank account" with a link to MSE for the best savings rates

http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

I'm rather puzzled why there is no mention of TSB paying 5% there or by Martin. Surely the best rate is the one that pays the highest and TSB has no monthly fee as Santander does.

I know TSB only pays on £2000 but for the vast majority of people this is still enough to contain their entire savings.

colsten

Probably something to do with the stars.

bowlhead99

I know the average person only has a few pounds of net worth, compared to some of the giddy amounts of savings and investments we talk about on here some times. So you are right, some people can put their entire life savings in something with a £2k limit.

But IMHO the token amounts you can fit into TSB and Nationwide before needing multiple accounts are not attractive to the average saver. I know some will say "well it's very easy to set up and it will virtually run itself." But £2k is a pretty paltry amount and the £2.5k at nationwide is time limited too.

Effectively the TSB offer is, keep bouncing money in and out of this account to exploit it to the absolute limit, and we'll pay you £100 in the year and nothing more on anything else you have saved in there. If you exploit it to the max, you get a taxed £100 sweetener. That's the offer. Getting a "free £100" for the hassle of running it is not to be sniffed at of course. But it's not a real alternative for a savings account, to most people. It's less than a seventh of what people can put away in an ISA each and every year and you can only have one of them.

As someone promoting savings it is very good to be able to say here's this current account that pays an inflation beating level of interest and will fit your entire salary and a whole lot more than a month's residual savings. It pays interest up to a figure well in excess of several months net pay and is great for the average person who might want a rainy day fund of £10-£20k. You can put ,£3k, 4k, 19.9k in it and it just keeps paying. That's 10x more than TSB and is "enough" for many many more people .

So, Tsb is just park £2k, collect £100 and move on. Santander is something that you can use to actually progressively add to savings each and every month for quite a while even if you are saving £500pm. Most people won't max it and would be interested that an account paying that much on a balance of that much, actually exists. £100 on a capped £2k is just a novelty, a £100 customer acquisition cost. Just like the even better effective return getting £5pm on a virtually zero balance at Halifax. While £300, 400, £500+ in interest each and every year, is a proper savings account substitute.

colsten

I suppose you can argue both ways - the "hassle" of having several current accounts and getting 4% and 5% in them, not to mention proper 3% accounts such as Tesco, is for many people not more hassle than needing 2 DDs on a 123, and having to keep your balance above £3K.

There is nothing wrong with letting people make their own decisions, and there is nothing wrong with expressing personal preferences. But it is very disappointing if a pre-selection is made by MSE based perhaps on arbitrary views of what people's requirements might be.

TrustyOven

Depends on what stage in your life you are.

At this exact moment (ignoring compounding and future deposits), I am on track to get:

Santander 123 (if I had an account): £114 a year.
Mixture of TSB, Halifax and Tesco : £237 a year.

For this, I have the MSE article to thank. But if the list of accounts is being trimmed in favour of keeping 123 in there, that makes me feel a bit sad.

I'd have to have £9907 in a 123 to break even. Isn't that more than a typical UK saver has in a cash ISA?

jimjames

bowlhead99 wrote: »

Santander is something that you can use to actually progressively add to savings each and every month for quite a while even if you are saving £500pm. Most people won't max it and would be interested that an account paying that much on a balance of that much, actually exists.

The bit that doesn't seem very MSE to me is that Santander has a monthly fee so for small amounts in the account the fee will be a far bigger deduction percentage than it would be if you had £20k in there.

Also Santander only pays interest from £3000 as far as I was aware. So suggesting it as the default option for saving seems a little misleading.

I'd really hope someone from MSE can explain why the TSB account isn't mentioned when it seems the most suitable for average savings and hope that it isn't that accounts are hidden if they don't pay commission via affiliate links.

eskbanker

jimjames wrote: »

Also Santander only pays interest from £3000 as far as I was aware.

It's actually tiered in line with the product name, i.e. 1% over £1K, 2% over £2K and 3% over £3K, but I agree with your points!

Archi_Bald

jimjames wrote: »

Also Santander only pays interest from £3000 as far as I was aware. So suggesting it as the default option for saving seems a little misleading.

It's 3% between £3k-£20k, 2% over £2k, 1% AER over £1k, as mentioned in the MSE write-up. But I agree, it is hard to understand why the other interest-paying current accounts aren't listed in this write-up, too.

Confusingly, MSE does know about most(*) of these other accounts but for some reason haven't incorporated this information into their Top Savings Accounts feature.
(*)BOS Vantage, another really nice up to 3% AER account with a £15K potential and no monthly charge still hasn't made it onto the list.

bowlhead99 wrote: »

But IMHO the token amounts you can fit into TSB and Nationwide before needing multiple accounts are not attractive to the average saver.

Much depends on how you define what an "average" saver is. Going by the Scottish Widows 2014 savings report, 55% of the adult population have between £1 and £50,000 in savings. The average those people have in savings is a mere £10,200. They have not published further breakdowns but I would suggest the majority will have savings below the average. I would think it is fair to say that the average saver could easily get substantially more interest in one of, or in a combination of TSB, Nationwide, Club Lloyds - and not to forget some Regular Savings accounts - than in the Santander 123.

Importantly a third (16m) of the british adult population has no savings at all. Needing £3K permanently in a current account that also needs 2 DDs and costs £2 a month might be beyond the reach of many. For them a simple account that pays 5% between £1 and £2,000 (or £4,000, as is currently still possible) could be a superb alternative, and may be even the difference between them saving something or nothing.

I have several 123 accounts myself but I don't understand why it is the only current account listed in the MSE top savings accounts write up. It is not suitable for everyone.

I also don't understand why the same article says "If you haven't opened a NISA this tax year (April to April), then it should be the first place to put your cash". But that's a different matter altogether.

DragonQ

The use of the term "market leading" is what annoys me. What does that even mean? 123 is not market leading in terms of fees or interest rates. It is the market leader in terms of how much it pays interest on, but whether it's the market leader overall is debatable.

For a lot of people, TSB's offering will easily be the best. 5% on up to £4000 with no requirement except for setting up a £500 standing order between the two. Lloyds' 4% account is nice too since it provides access to a 4% regular saver (basically upping the maximum limit you can get interest on) and bonuses like discounts and free cinema tickets or gourmet society membership. Of course, Santander's 123 account has similar benefits like cashback so it's really hard to compare in a simple way. It's totally down to the individual's circumstances. I have a 123 account but it's my "last resort" after my Lloyds current account, Lloyds regular saver, TSB current accounts, Tesco current accounts, and Nationwide regular saver ISA accounts are full.

It'd be better if the MSE website instead mentioned that lots of current accounts best savings accounts and ISAs right now and just link to the current account page (or just include the table of interest rates, limits, and fees). At the moment it gives the impression that Santander just pay MSE to questionably advertise their 123 account. Maybe they do?

masonic

If you look on the best bank accounts article, you'll see the TSB account is listed if you scroll right down, but doesn't have an MSE affiliate link, so that may be part of the reason why Martin is reluctant to talk about it.

enthusiasticsaver

I have two Santander 123s and use one as a main current account joint with hubby and the other as an emergency/home improvements/holiday savings accounts which we put all our spare money into every month. A 2k limit would not really be particularly beneficial to us as ours are considerably more than that ( a lucky consequence of being mortgage free) and I make sure that I use the direct debits on there to outweigh the cost of the monthly fee of £2 with the cashback. Council tax, water and gas and electric on one and phone bills and sky subscription on the other. We would need 20 TSB accounts to be able to invest the same amount as in Santander which is entirely impractical and probably not allowed.