What's the best way to save, ISA or 5% interest account?

lanceuppercut

YorkshireBoy wrote: »

Until such time as you have and can maintain at least £500 in each, you should avoid SOs altogether.


Instead, make your payments manually once per (calendar) month on payday or shortly after.

My idea was to automate (using SO) the £500 merry go round finish after I get paid but before my bills go out, so that way I know the £500 is there and I wouldn't get caught short mid month.

I would manually make any payments into the TSB accounts so I know what is in there and not, the SO is to satisfy the £500 criteria for gaining interest on the TSB accounts.

YorkshireBoy

lanceuppercut wrote: »

My idea was to automate (using SO) the £500 merry go round finish after I get paid but before my bills go out, so that way I know the £500 is there and I wouldn't get caught short mid month.

There are too many variables...weekends, Bank Holidays, problems with BACS, salary being late, unexpected bills leaving you short, etc.


With manual payments you're in control of 'when'...until such time as you've more than £500 in each TSB account.

I would manually make any payments into the TSB accounts so I know what is in there and not, the SO is to satisfy the £500 criteria for gaining interest on the TSB accounts.

The credit does not have to be a standing order...if that's what you're thinking? Any old credit (cheque, cash over counter, immediate FP, future dated FP, etc, etc) will do.

lanceuppercut

YorkshireBoy wrote: »

There are too many variables...weekends, Bank Holidays, problems with BACS, salary being late, unexpected bills leaving you short, etc.


With manual payments you're in control of 'when'...until such time as you've more than £500 in each TSB account.The credit does not have to be a standing order...if that's what you're thinking? Any old credit (cheque, cash over counter, immediate FP, future dated FP, etc, etc) will do.

I hear what you're saying about unexpected bills and such, I've sat down and taken a proper look at my expenses so I am able to work out how much I need to manually put in each TSB account each month so it doesn't leave me short.

24th of the month = Payday
28th of the month = Natwest to TSB 1
1st of the month = TSB 1 to TSB 2
2nd of the month = TSB 2 to Natwest
6th of the month = Mortgage payment goes out

That leaves me with 4 days from when I get paid (to cover any weekend/bank holiday issues) to when the £500 starts to move around accounts.

By the time the same money comes back to Natwest, it then goes out as part of my mortgage payment so it's just making a small detour before it has to go anyway.

Granted the one thing that this plan cannot cover is non-payment but I am full-time and if something happens to my job, I can plan to move money around if needed. But that would still be the case even if I wasn't doing all of this switching around.

I just wanted to maximise the potential interest on these accounts by having as much in the TSB accounts for as long as possible was all.

YorkshireBoy

lanceuppercut wrote: »

24th of the month = Payday
28th of the month = Natwest to TSB 1
1st of the month = TSB 1 to TSB 2
2nd of the month = TSB 2 to Natwest
6th of the month = Mortgage payment goes out

I just wanted to maximise the potential interest on these accounts by having as much in the TSB accounts for as long as possible was all.

The way you're proposing funding, ie SOs on the above timings instead of manual payments, will not achieve that objective!

There's around 6 days each month (that's a fifth of the month...20% of the time!) your money is sat in NatWest making zilch...3 days waiting to send it, and 3 days waiting to pay your mortgage! EDIT: Actually, thinking about it further, it could be as many as many as 8 or 9 days (nearly 33% of the time) if weekends and Bank Holidays get in the way.

Anyway, you'll operate the best way to suit yourself. Me?...I'll continue to maximise my interest in the way I've tried to explain to you. Best of luck.

colsten

YorkshireBoy wrote: »

There's around 6 days each month (that's a fifth of the month...20% of the time!) your money is sat in NatWest making zilch

OP, what is the reason for having any money in Natwest? I didn't think Natwest have an account which requires a minimum monthly deposit for any reason. Is it a condition of your mortgage that you hold a Natwest current account?

Could you not make better use of your money if your salary & spending money was in an interest-bearing account, such as Tesco?

lanceuppercut

I'm looking at changing to Halifax using the switching scheme, but that won't affect any of the savings accounts I have, will it?

Edit: have just switched over to the Halifax Current account. The above question still stands, what about my savings accounts with Natwest, are they still active after this switching closes it down?

Edit2: Or the linked credit card under my name (that shows up on online banking)

B_G_B

lanceuppercut wrote: »

24th of the month = Payday
28th of the month = Natwest to TSB 1
1st of the month = TSB 1 to TSB 2
2nd of the month = TSB 2 to Natwest
6th of the month = Mortgage payment goes out

As others have mentioned, setting up SO’s in and out of “underfunded” accounts is a dangerous game. With your plan here it would only take one small hiccup at a weekend / end of month for problems to arise. End of next month being one example.

lanceuppercut

B_G_B wrote: »

As others have mentioned, setting up SO’s in and out of “underfunded” accounts is a dangerous game. With your plan here it would only take one small hiccup at a weekend / end of month for problems to arise. End of next month being one example.

Okay point taken, I'll simply delay setting up the SO's for a month so that I know there will be more 500 in both accounts (as I will set it up to happen after payday but before the mortgage goes out) to give a little leeway for any hiccups.

YorkshireBoy

lanceuppercut wrote: »

Okay point taken

Yeeahh

I'll simply delay setting up the SO's for a month so that I know there will be more 500 in both accounts

Ermmm, no, we're back to square one again!...

(as I will set it up to happen after payday but before the mortgage goes out) to give a little leeway for any hiccups.

If you have more than £500 in each account you don't need to use any NatWest money for meeting the funding requirements...just for additional savings...because the 2 TSB accounts will be self funding via cross-firing internal SOs from that point onwards.

lanceuppercut

YorkshireBoy wrote: »

YeeahhErmmm, no, we're back to square one again!...If you have more than £500 in each account you don't need to use any NatWest money for funding...just additional savings...because the 2 TSB accounts will be self funding via SOs at that point.

We're not back at square one! What am I not understanding then, if on the day I decide to transfer the money around, I have:

Main account = £500
TSB account = £500

Ignoring every other bill because I will arrange it for a day where I have nothing going out, if the main account's SO is delayed then it will mean that:

TSB = £0
Main account has £1000 until that SO runs and puts the £500 into TSB

And vice versa.

I don't understand why you think I'm not seeing the point, you're worried that if during the money merry go round, if one of the SO's is delayed that will put me -£500 in overdraft. But if I have more than £500 in those accounts at the time (making sure there are no other bills to be paid) then I'm not going into overdraft on either of the accounts.

The whole thing was to automate the £500 requirement into the TSB account then back to where it came from.

The the SO isn't to decide how much goes or stays in the TSB account or how being with Natwest isn't doing anything for me (I realise this and am switching over to Halifax).