£12000 very short term investment

Kendall80

redux wrote: »

Before slagging off too many people, go back and read some other replies again.

4 and 5% are possible, and without the bank charges or glacial transfer speeds that one person on this thread invented.

He may not have the time to read through all the hijacked material.


It would suffice to say that the current account 'thing' is very simple to set up, can be automated with SOs and many of us here are doing it.


There are many threads which can be accessed via the forum search feature which should further elucidate the matter.

InvestInPoker

In all honesty I also sometimes think the full on pressure for the current account dance is a (little) bit OTT sometimes as well. Several factors are overlooked or under represented to people asking for advice.

It's not always as easy as "just open the accounts". It is possible to have a completely clean credit history and life but be turned down for a current account. Especially if you have no Job or regular income that a bank will accept as "regular income". A negative application has consequences for future applications and is a source of stress. I realise most posters on here will not have encountered this issue but it's not as easy as it is made out to be.

Also even if you are accepted then several applications within a 6 month period (which you would have to do if you wanted all the accounts) look terrible on any future credit check and can have real implications for something like a mortgage application. This is touched on briefly on the official MSE article on the subject but never mentioned on this forum. It is a big negative to the whole thing - unless you take care to string out the account openings over a few years.

Finally yes it is allowed in the t&c and yes everyone does it but no, any reasonable person must assume banks do not like customers who just do a money merry go round every month to qualify for the interest and have no real intentions of using the account as proper current account. I am not suggesting this is happening at the moment but I would not be surprised to see banks clamping down on this sort of activity at some point. We have all read the stories of people having their accounts closed for whatever reason.

masonic

InvestInPoker wrote: »

In all honesty I also sometimes think the full on pressure for the current account dance is a (little) bit OTT sometimes as well. Several factors are overlooked or under represented to people asking for advice.

It's not always as easy as "just open the accounts". It is possible to have a completely clean credit history and life but be turned down for a current account. Especially if you have no Job or regular income that a bank will accept as "regular income". A negative application has consequences for future applications and is a source of stress. I realise most posters on here will not have encountered this issue but it's not as easy as it is made out to be.

Also even if you are accepted then several applications within a 6 month period (which you would have to do if you wanted all the accounts) look terrible on any future credit check and can have real implications for something like a mortgage application. This is touched on briefly on the official MSE article on the subject but never mentioned on this forum. It is a big negative to the whole thing - unless you take care to string out the account openings over a few years.

I agree that individuals should consider their circumstances before going ahead and perhaps it is sometimes assumed that posters will not be making an imminent mortgage application or that they have not had past debt problems that could prevent them getting a current account easily. I've certainly seen one or two threads where a poster has come back with additional information highlighting one of these potential issues and then been directed towards something else.

However, I don't agree with your comment about a negative application. I'm sure that you are aware that the result of an application for credit is not recorded. 'Well,' you might say, 'if a creditor has a sufficiently sophisticated scoring system, they could simply cross reference the applications against the lines of credit offered by the same institution to deduce which were successful.' It can't be ruled out as every institution will have its own way of scoring individuals, some far more strict than others. However, there are valid reasons why a successful application might not translate into a line of credit, such as cancellation under the cooling off period. The key is therefore not to continue submitting applications if one fails, but instead research the cause of the failure and take corrective action if necessary. That doesn't just apply in this situation, but any time you are unsuccessful in applying for credit, so perhaps that gets taken for granted by some people who offer advice here.

While I think those with past debt problems or impending mortgage applications should tread especially carefully around current account applications, I don't agree that those who do not have regular incomes need necessarily do so. Many years ago, when I was a student, I recall a bank called Alliance & Leicester allowing me to open several issues of their Premier and Premier Direct current accounts, which were remarkably similar to contemporary accounts, while stating my income as £0. ISTR others posting similar success stories more recently, but of course there is always the possibility of failure, in which case it comes back to using best practice in the event of an unsuccessful application to avoid negative consequences.

Finally yes it is allowed in the t&c and yes everyone does it but no, any reasonable person must assume banks do not like customers who just do a money merry go round every month to qualify for the interest and have no real intentions of using the account as proper current account. I am not suggesting this is happening at the moment but I would not be surprised to see banks clamping down on this sort of activity at some point. We have all read the stories of people having their accounts closed for whatever reason.

I recently posted this article from 2005 in another thread, showing high interest current accounts have been going strong for at least a decade. On the whole, things haven't changed a great deal, although one difference in some contemporary accounts is the increase in the balance that will attract a high rate of interest from the typical £2-2.5k up to £5k or £20k in one example. This rather suggests the banks are actually encouraging customers to use these accounts as savings accounts. The average person using a current account for its intended purpose is unlikely to benefit from these limits and high credit balances are not conducive to the bank's normal means of making money from current accounts by extracting fees for usage of credit facilities.

It seems like these banks know exactly what they are doing and are capitalising on an unusual interest rate environment in order to gain market share in an effort to cross sell profitable credit cards and loans, because the type of customer who makes them money through the operation of their current account is unlikely to benefit from interest on a £20k account balance. If that's the case, anyone who avoids cross selling, interest charges and penalty fees would be a target if the banks really wanted to remove their facilities from unprofitable customers.

jimjames

InvestInPoker wrote: »

Finally yes it is allowed in the t&c and yes everyone does it but no, any reasonable person must assume banks do not like customers who just do a money merry go round every month to qualify for the interest and have no real intentions of using the account as proper current account. I am not suggesting this is happening at the moment but I would not be surprised to see banks clamping down on this sort of activity at some point. We have all read the stories of people having their accounts closed for whatever reason.

In my normal current account I am routinely moving hundreds or thousands of pounds around each month in normal account operation so I can't see that being seen as any different from moving to hit balance targets other than using very round numbers.

InvestInPoker

Thanks for the good replies both of you

masonic wrote: »

that they have not had past debt problems that could prevent them getting a current account easily.

It's not just past debt problems which can prevent a current account application from succeeding though.

However, I don't agree with your comment about a negative application. I'm sure that you are aware that the result of an application for credit is not recorded.

Ok well I did not know an unsuccessful application for credit is not recorded (I had assumed it must be somewhere?). A successful application must be recorded though? I have purchased reports on myself clearly showing my successful applications

The key is therefore not to continue submitting applications if one fails, but instead research the cause of the failure and take corrective action if necessary. That doesn't just apply in this situation, but any time you are unsuccessful in applying for credit, so perhaps that gets taken for granted by some people who offer advice here.

It can be extremely hard to find the actual reason for a denied application

While I think those with past debt problems or impending mortgage applications should tread especially carefully around current account applications, I don't agree that those who do not have regular incomes need necessarily do so. Many years ago, when I was a student, I recall a bank called Alliance & Leicester allowing me to open several issues of their Premier and Premier Direct current accounts

It's not just debt problems that can cause an issue though. Your student story is not quite what I was getting at. Banks actively court students (I was one once as well!). It is very easy to get a bank account with all the frills as a student and with a marked income as 0. Try the same application with no job and no student status or income that they will accept - it is not quite as easy.

This rather suggests the banks are actually encouraging customers to use these accounts as savings accounts.

We will have to agree to disagree. I think banks are encouraging customers to open accounts so their reports on active accounts look better and they stand a chance of snagging a good customer. It's working from them at the moment but it would not surprise me if they changed tact in future

anyone who avoids cross selling, interest charges and penalty fees would be a target if the banks really wanted to remove their facilities from unprofitable customers.

They are clearly not a good customer from the banks bottom line point of view but someone doing a merry go round with money on top of all of that is a level worse.

masonic

InvestInPoker wrote: »

It's not just past debt problems which can prevent a current account application from succeeding though.

I did not intend my two examples to be taken as an exhaustive list. Another common reason for being refused credit is simply not being on the electoral roll, for example.

Ok well I did not know an unsuccessful application for credit is not recorded (I had assumed it must be somewhere?). A successful application must be recorded though? I have purchased reports on myself clearly showing my successful applications

The result of a credit search is not recorded by the CRAs. This is a common myth, covered by the Experian Credit Report Basics document and elsewhere. It is possible that these purchased reports have used exactly the trick I described above, of cross referencing searches against new accounts to deduce which where successful.

It can be extremely hard to find the actual reason for a denied application

If you are refused credit, you have the right to ask the lender why. That might not be particularly enlightening in some cases. If you ask over in other parts of the site more centred around credit, you'll find people who can quickly reel off half a dozen or more common reasons, and the vast majority of people who have been refused credit, with a bit of perusal of their credit reports and the details they provided in their application, will find a likely reason.

It's not just debt problems that can cause an issue though. Your student story is not quite what I was getting at. Banks actively court students (I was one once as well!). It is very easy to get a bank account with all the frills as a student and with a marked income as 0. Try the same application with no job and no student status or income that they will accept - it is not quite as easy.

That's certainly true of specialist student accounts (but non-student accounts tended not to give students any special treatment in my experience), and I had one of those with a huge interest-free overdraft as well. But by that point, technically I was in postgraduate education and no longer loved as much by the banks. But that's beside the point. I also alluded to other anecdotal accounts, which did not all relate to students. Self employed and those in pre-retirement and not currently earning are others I can hazily remember being discussed at one time or another, but it all comes down to the golden rule, one failed search is unlikely to have a material effect as it could plausibly be interpreted as a search that did not result in the offered account being accepted by the customer.

We will have to agree to disagree. I think banks are encouraging customers to open accounts so their reports on active accounts look better and they stand a chance of snagging a good customer. It's working from them at the moment but it would not surprise me if they changed tact in future

As I alluded to above, we're in an unusual interest rate environment. I think that is far more likely to change sooner than the banks offering these accounts decide to pull them. It wouldn't take a huge hike in interest rates for the fixed rate accounts to start looking more attractive than these current accounts.

They are clearly not a good customer from the banks bottom line point of view but someone doing a merry go round with money on top of all of that is a level worse.

Well this comes back to moral judgements, which are a matter of opinion. But personally, I'm quite comfortable that I'm operating in an environment where a moral compass is unlikely to drive operational decisions. In terms of the moral views of others, I've always regarded these offers, as well as cashback, switching incentives etc, to come straight from the marketing budget, so the way I see it, it's better that money be spent in this way rather than increasing the amount of pervasive advertising we are all subjected to.