Santander UK - 123 Bank Account, doubts.

Mark1987

Hi everybody, I'm sorry for talking once again about this bank account but I have a few specific doubts/questions.

I have about £25k/£30k which I would like to "invest" in a saving account to receive interests every month. At the moment I'm using a TSB Classic Plus as my main account and I was thinking about opening a Santander 123 Bank Account and move there at least £20k. If I'm not wrong, to receive interests every month I just have to move there at least £500 every month and two direct debits, like netflix and spotify. Is it right?

On the website I saw that the interest rate is variable. Could you please tell me the current net interest rate? Is there the risk to have a great change in the rate in the next weeks/months?

Once I receive my monthly interests, I have to pay additional taxes on them?

With the remaining £5k I was thinking about the Club Lloyd account.

What do you think about my situation? Am I doing a good thing?

Thanks!
Sorry for asking so many questions but I've never moved these amounts of money so I want to be sure about what I do.


P.S. If I'm not wrong, I can't use direct debits like Netflix and Spotify but they should be in this list: http://www.santander-products.co.uk/banking/calculator/cashbacksearch.html

At the moment I have a contract with O2, so I just need to change the card used for that payment and choose another company from the list. Could you confirm me that?

savings_my_hobby

I'd leave £2000 in your tsb classic plus account

I'd open a nationwide account and put £2500 in it

I'd open a club lloyds account and put £5000 in it

then put the rest in a santander 123 account

- not forgetting to set up standing orders to swap £1500 from account a to account b to account c to account d to activate the interest.

then I'd open a M&S account and put in £250 a month every month.

the others on here would probably to it a better way, but this is still better than your current set up.

Mark1987

Wow, it sounds a good plan. But where is the trick? It seems to easy to me...

Moving money between accounts it's not a problem. I just have doubts about these direct debits. For example if I use the 123 account for O2 and Sky should be fine? They are both listed on the Santander website.

Do you know the current net interest rate for Santander?

Thank you!

YorkshireBoy

DDs don't have to pay out (for interest), but they'll lapse after 13 months of non-use. If you can, get some that pay cashback otherwise your effective return is less than 2.96% gross p.a. (maybe 2.8x%?)

Whether you pay any further tax will depend on whether you're a basic or higher rate tax payer. Tax at 20% is automatically deducted by Santander unless you submit an R85.

Your net rate is 2.96% x 0.8 = 2.37%

The rate could vary at any time, but they'd have to rename the account if they didn't pay 1%, 2%, and 3% don't you think? If they do anything, they'd probably reduce the max balance to £10K or whatever, but still retain the interest tiers. All in my opinion of course.

Mark1987

Well, 10k would be still good but if they decide to remove interests on this account...

Sorry, can you explain me better the first part about DDs? Paying an O2 contract every month and my Sky subscription should be enough, right?

I have a normal 24-month O2 contract for the iPhone and I'm going to use Sky once I open my bank account.


Ah ok, I've read again So to obtain interests it's not necessary to have DDs. That's only for cashback on bills. Right?


(I think to be a basic rate tax payer, I earn £25k/year)

savings_my_hobby

Mark1987 wrote: »

Wow, it sounds a good plan. But where is the trick? It seems to easy to me...

Moving money between accounts it's not a problem. I just have doubts about these direct debits. For example if I use the 123 account for O2 and Sky should be fine? They are both listed on the Santander website.

Do you know the current net interest rate for Santander?

Thank you!

It is easy, - I dont actually have a santander account myself, Its only worth while once you have maxed the others out, it shall be a future one for me to work towards, therefore im not sure what passes as a direct debit, perhaps you could ask in store? netflix etc should be fine i'd have thought but double/triple check.

the tax on your interest will be deducted for you so if an account pays 3% you get 2.40% or £24 for every grand

Mark1987

Thanks guys! I'm going to open this account on Saturday, I will ask all my doubts and then probably I'll open the other accounts you suggested me, keeping my Classic Plus as main one for the moment.
I hope I'm doing something good and not just moving money for nothing.

savings_my_hobby

ceredigion wrote: »

InterestAccount balance1.00% AER gross (variable)


£1,000+2.00% AER/1.98% gross (variable)


£2,000+3.00% AER/2.96% gross (variable)From £3,000 to £20,000

mark1987 - dont forget 2.96% - 20% (basic tax payers rate) = 2.36% so be sure to max out the other accounts first,

YorkshireBoy

Mark1987 wrote: »

Sorry, can you explain me better the first part about DDs? Paying an O2 contract every month and my Sky subscription should be enough, right?

Yes, but the more qualifying bills you pay by DD the more money you make/save overall.

Ah ok, I've read again So to obtain interests it's not necessary to have DDs. That's only for cashback on bills. Right?

No. The prerequisites for both interest and cashback are:


£500 credit (statement month, not calendar month)
2 DDs set up (but not necessarily paid each month)
Pay a £2 monthly fee.

savings_my_hobby

Mark1987 wrote: »

Thanks guys! I'm going to open this account on Saturday, I will ask all my doubts and then probably I'll open the other accounts you suggested me, keeping my Classic Plus as main one for the moment.
I hope I'm doing something good and not just moving money for nothing.

please dont leave more than £2000 in your tsb account as no interest will be paid on anything above 2k.

read the conditions to ensure you set up dd's and pay in the correct monthly amount for each account you want to open, beware of fees, and deduct said fees from your interest to accurately compare accounts

Mark1987

mark1987 - dont forget 2.96% - 20% (basic tax payers rate) = 2.36% so be sure to max out the other accounts first,

Sorry, what do you mean?

No. The prerequisites for both interest and cashback are:


£500 credit (statement month, not calendar month)
2 DDs set up (but not necessarily paid each month)
Pay a £2 monthly fee.

So, every month they will check if I paid £500 into my account and (maybe) if I have been charged for 2 DDs. It is easy to satisfy both conditions so I can be safe.