isa or current accounts for savings ?

kemp596

I have a first direct current account and have opened there regular saver which I will be paying the full £300 per month into,

However I am looking where best to put the rest of my savings around £5000, tsb offer 5% on there current acc and so do nationwide, should i open up these accounts and divide the money for the high interest however in a years time when the rate drops i will need to move the money again, and probably close these accounts, would this look bad on credit report etc ? or should I pick the best isa for 1 or 2 years? thanks

jimjames

I wouldn't bother with a cash isa.

Tsb rate is not for 12 months, no end has been given.

xylophone

Assuming that you can satisfy the monthly funding requirement (remember that the funding money does not have to stay in the account) and 2 DDs (these are easily arranged if you open an internet saver and an instant access saver with Tesco), you could open an account with Lloyds - 4% on £5000. This rate does not drop after a year.

The TSB rate does not end after a year.

kemp596

sorry I meant the nationwide ends after a year,

So if i open the tsb 5% nationwide 5% and lloyds 4%, My salary gets paid into a first direct account, could i set up a direct debit for £1500 a month to be paid into the lloyds acc, then set up two direct debits from the lloyds for £1000 into the nationwide and £500 into the TSB, then have this £1000 and £500 be paid back into my first direct account ?

if so is there any limit the money paid in has to stay in the account for ? or could it be done over 1/2 days ? thanks.

jimjames

kemp596 wrote: »

if so is there any limit the money paid in has to stay in the account for ? or could it be done over 1/2 days ? thanks.

No limit at all. Mine stays in the account for much less than 30 seconds.

Of course you want to make sure the accounts are fully funded so you get the maximum interest but the transfer payments don't need to stay for any time.

colsten

These are current accounts, so you don't have to keep your money in there for any length of time. You can withdraw/transfer out the minimum payment seconds after deposit (or transfer out and then transfer back in within seconds).

However, you cannot transfer money between current accounts by Direct Debit. You can do it with Standing Orders or Faster Payments.

YorkshireBoy

The 3 accounts you've mentioned have the (interest earning) capacity to hold £9,500...but you only have "around" £5K.


You'll need to keep Club Lloyds between £4-5K to earn 4% AER, which doesn't leave much for the other two accounts?

kemp596

thanks for all the replies been very helpful, so for the club lloyds account I would need to set up my phone bill and car finance for the two DD rather than two current accounts which is fine.

YorkshireBoy wrote: »

The 3 accounts you've mentioned have the (interest earning) capacity to hold £9,500...but you only have "around" £5K.


You'll need to keep Club Lloyds between £4-5K to earn 4% AER, which doesn't leave much for the other two accounts?

I have £4100 which would go into the club lloyds, and the money that I was going to put into a regular saver at £300 a month (£3600 a year) would now be better put into current accounts for higher interest, plus the £900 spare for my 5k would go into tsb and nationwide 5.5 between them. if this makes sense

ColdIron

kemp596 wrote: »

and the money that I was going to put into a regular saver at £300 a month (£3600 a year) would now be better put into current accounts for higher interest

The First Direct regular saver pays 6% so you would still be better with this than a 5% account

YorkshireBoy

How much in addition to the £300 with FD are you planning to save per month over the coming months?

Because if it's less than £400, you may be better with Club Lloyds and a Club Lloyds regular saver running alongside your FD set up. Nice and easy, but you won't make quite as much!

kemp596

ColdIron wrote: »

The First Direct regular saver pays 6% so you would still be better with this than a 5% account

the first direct pays the interest monthly I believe so £90 in the year after tax, where as the £3600 in a 4% account would earn £115 interest in a year ?