Advice needed - new account with best interest rate

jpsartre

I'm starting a new job this summer with a 1-year contract which pays my entire annual salary up front. I'll be getting the money shortly which means I'll basically be sitting on it for more than 6 months before I'll start spending it (and even then it will take a while before it's all gone).

What would be the best course of action as far as getting a bit of interest on it? It will be about £35k. I'm happy to open a new bank account and pay my current salary into it every month although once my new contract starts I won't be getting a monthly salary any longer (I could still manage to make monthly payments into to account if need be though). I could also move some direct debits there. I'd like to keep my current bank account though (which pays very little interest), so not looking to switch entirely.

Anything that stands out as the obvious thing to do or is it just not possible to open a new account while keeping my old account active? If the latter, could I switch my personal account and keep the joint account I have with my wife at my old bank or would I need to switch both?

pacontracting

I think the Santander 123 account pays the best amount of interest (3% up to 20K).

You could work out how best to benefit from this i.e. transfer 20K into the account on day one, then pay 1K per month into your account to maintain eligibility. That will take you up to 32K?

I'm guessing you are going to have to live on this 35K over the year though?

jpsartre

Thanks, I did see the Santander offer and it looks like it's the best one out there. Transferring £20k and then paying in another £1000 every month from the remainder is a good idea. And yes, from summer I will start living off the money.

Steve_xx

The Santander account will take care of 20k of it at 3%. But the TSB account is worth considering @ 5% on a balance of 2k. Also you should consider the Club Lloyds current account which will pay 4% on a balance of 5k, as well as providing a couple of other sweeteners like free cinema tickets or a monthly magazine of choice. There is also a Regular savings account that can be attached to the Club Lloyds accounts and that pays 4% and you can deposit between 25 and 400 a month into it for a year.


The Nationwide Flexdirect account pays 5% on a balance of 2.5k for 12 months.

inspireme247

Steve_xx wrote: »

There is also a Regular savings account that can be attached to the Club Lloyds accounts and that pays 4% and you can deposit between 25 and 400 a month into it for a year..

Or 6% with First Direct.

Steve_xx

inspireme247 wrote: »

Or 6% with First Direct.

Yes, but that requires a First Direct current account, which currently pays zero interest!

Steve_xx

I may add that the Bank of Scotland's current account with Vantage added pays 3% on balances between 4 and 5k. so that will just about take care of your 35k.

robotrobo

jpsartre wrote: »

Thanks, I did see the Santander offer and it looks like it's the best one out there. Transferring £20k and then paying in another £1000 every month from the remainder is a good idea. And yes, from summer I will start living off the money.

Hi JP.
Keep your existing current account ,open 2 Santander 123accounts,20k in first one , 10-14 k in second account
£500 to fund the Santander accounts , send or best standing order every month & keep the same £500 going around to fund the accounts.

inspireme247

Steve_xx wrote: »

Yes, but that requires a First Direct current account, which currently pays zero interest!

Fair enough

Steve_xx

robotrobo wrote: »

Hi JP.
Keep your existing current account ,open 2 Santander 123accounts,20k in first one , 10-14 k in second account
£500 to fund the Santander accounts , send or best standing order every month & keep the same £500 going around to fund the accounts.

I think if you have two Santander 123 accounts then one has to be in joint names?


And, the other accounts that I mentioned pay more interest than the Santander does, two thirds more in the case of TSB.

colsten

Easy to get 35K into current accounts: http://www.moneysavingexpert.com/savings/savings-loophole, plus the BOS Vantage.
Though interest on some drops significantly if you don't hold the top balance tier.

Regular Savings accounts aren't very good for lumpsums, and many lock your money away for 12 months.