Best deal around for the short term?

the_learner

Hi,

I am currently a Barclays customer and I am looking for the best deal around in the short term.
In april I will move money to fill the new ISA so I will be left with around £10,000 in the current account.

What is the best deal in the short term (e.g. less than 1y)?
I see that Santander pays 3% on balances up to 20k but there is no switching bonus and I should pay 40% taxes on interests. No particular cashback apart from £10 a yer for the council tax.

Is is better to switch to Clydesdale Bank instead?
The £150 switching bonus is tax free right? In wich case it would make sense to switch to them and then after some months switch to Santander or whatever other account paying high switching boinus.

It looks like switching bonus are more attractive that higher interests if you pay 40% taxes on the latter.

What are your thoughts on this? I will use the current account just to get the salary and do normal shopping using debit card.

Thanks.

grumbler

Best deal for what?
Generally, switching for a bonus and getting the highest interest are absolutely different and unrelated things. You can get both, but with different accounts.

For the best interest see MSE article:Top Savings Accounts
I guess you'll have to spread your £10K between several accounts to get more than 3% gross.

bolzano

A few points to consider:

The Clydesdale switch is quite a mission whereas the Halifax switch is nice and easy. You also get the free fivers, which are not taxed further.

TSB pays 5% on up to 2k and is easy to set up. Even taxed at 40% that will probably beat any ISA rates.

As long as you have a decent credit history, you could consider setting up a second account to be switched in parallel. You say

switching bonuses are more attractive than higher interests

but why not have it all?

the_learner

With Santander on 10k I get £300 interest which is £180 after 40% tax.
By usinf switching bonus I might get £150 tax free and after some months move to Santander.

bolzano

Just set up a Santander straight away (no bonus for switching) and put any money not at a higher rate in there. Separately do a switch (or 2) to Clydesdale/Halifax/etc. You may as well be getting the interest on the 10k straight away.

grumbler

bolzano wrote: »

Just set up a Santander straight away (no bonus for switching)

I'd suggest opening a 'donor' account with any bank, e.g. with the same Barclays, then switching it to Santander for £37 TCB cashback. Every little helps.

the_learner

bolzano wrote: »

Just set up a Santander straight away (no bonus for switching) and put any money not at a higher rate in there. Separately do a switch (or 2) to Clydesdale/Halifax/etc. You may as well be getting the interest on the 10k straight away.

But when switching they will close Santander right?
So I was considering: Clydesdale for few months then Santander to get 3% on whatever amount I have at that point.
Alternatively: Clydesdale for few months and then switch to Halifax to get the bonus there as well.
But £5/months are already taxed at 20% so I still need to pay further taxes on it.

YorkshireBoy

bolzano wrote: »

...the Halifax switch is nice and easy. You also get the free fivers, which are not taxed further.

That's not correct. The OP is a HR tax payer, so there is a further tax liability (on top of the 20% already deducted prior to payment).

bolzano

YorkshireBoy wrote: »

That's not correct. The OP is a HR tax payer, so there is a further tax liability (on top of the 20% already deducted prior to payment).

Oops, yes :embarasse I will go back in the box.

colsten

the_learner wrote: »

But when switching they will close Santander right?

Not unless you ask them to switch it. The suggestion is that you have several accounts, and use only one or two of them for switching.

the_learner

I thought that switching account you actually close the old one to move everything to the new one.