Santander & Lloyds Account

sezegg

Hi,

Just looking for some advice please, I've recently paid off most of my outstanding debts (except for my car finance) and I'm now going to be using that extra income to save £500 a month. I currently have a normal Lloyds current account and have applied for a Santander 123 account.

Bit of background first, My credit file was awful but I've spent time on my report finding old debts and settling them, as of last week all my accounts are paid off and any open lines of credit are at 0, my credit file is in pretty good order now. I managed to get an account with Lloyds 2 years ago after having a basic easycash account with Halifax, I'm in good standing with Lloyds now and have £1000 overdraft which is rarely used and wont be used from now on.

A year ago I also got a capital one card (£200 Limit) which I use around £60 a month and pay in full to further improve my credit file.

My plan is to save £500 a month until I have enough to clear my outstanding car finance, my settlement figure would be around £6500 in August 2016 and still continue to save after this with a view putting money aside for retirement/emergency funds etc (I'm 31 and have no pension/savings at the moment)

What I'm torn between is:-

Option one
Leave my salary paid into my Lloyds current account and transfer the £500 savings plus enough to cover the 2 direct debits I would set up.

Option two
Effectively switch over to the 123 account and transfer spending money into my Lloyds account, leaving my savings building up in here with all my direct debits coming out of this account.

Would option two have a negative affect on my standing with Lloyds? I'm worried about going backwards in my credit worthiness. But I'm also thinking down the line after my account with Santander is also in good standing that an addition of the 123 credit card would be good to use for my monthly shopping (and pay in full)

Anyway sorry for the wall of text! I'm at the stage in life where I've finally taken control of my finances and I'm looking to get the best out of my money, its not mega bucks I know but I have to start somewhere.

Thanks

NoMore

Why the Santander 123 account ?

If you have little or no savings at present there's other accounts I would consider before the 123.

TSB gives 5% on upto £2000
Club Lloyds has variable interest depending on balance with 4% paid on between £4000 to £5000.
Nationwide are giving 5% on £2500 for a year.

I would be considering and filling those before I looked at the 123.

sezegg

I like how the 123 account gives you cashback for utilities, mobile phone direct debits etc and as I'm already paying a few of these on my Lloyds account it seemed like an added bonus.

I did look around at just saving accounts but the interest rates didn't seem all that great compared to the added bonuses the 123 has. Club Lloyds also charges £5 per month as my wage is slightly below £1500 (I'm not sure If I could draw out an amount and deposit again to get over £1500) versus the £2 of the 123.
I appreciate the advice though as I am new to all this and will have a look at the accounts you mentioned.

*Edit, with the TSB my balance would be over £2000 in 4 months, does the interest drop? The interest isn't a big factor at the moment but It will be when Im keeping the savings after my car has been paid off

Im assuming I could open all of these and have the maximum amounts in each account.

NoMore

The point is you open a TSB until its got £2000 in, then you open a Nationwide until it has £2500 in then you open a Club LLoyds until it has £5000 in then you open the 123 account. By then you will be close to the Nationwide ending its year and so you start the 123 with a nice 2500 bump.

Of course you have to keep passing money around all these accounts to satisfy the conditions but its not that hard.

Welcome to the world of multiple current accounts.

Unless you have a Santander Mortgage the 123 cashbank is largely negated by the £2 fee.

EDIT: This is just my quick suggestion, I'm sure other members could come up with other accounts that offer even better returns

sezegg

Ah I see! I didn't think of doing it like that, as it stands I don't know much about these things so all your advice is helpful. I do have the option to upgrade my current account to club Lloyds on my online banking so your way may be a good idea. Although I would then need to pay in £1500 to cover the £5 fee.

NoMore

As you guessed earlier, if you just take some out and then deposit it back in it will count towards the total £1500 credit in one month.

If you have the option then thats probably the easiest thing to do at the moment before opening other accounts.

sezegg

Thanks for the advice, I will have a look into the club Lloyds upgrade tomorrow, however I have already applied for the 123 account yesterday, Is it even worth using the 123 account or should I just phone them and cancel it before its set up? Or will it be worth keeping for down the line.

colsten

Club Lloyds has tiered interest rates - your balance needs to be between 4 and 5K to get the 4%.

Similar at 123 - you need to have £3K in the account to get 3%.

TSB, Tesco and Nationwide are easier in that regard but have lower limits.

YorkshireBoy

NoMore wrote: »

Unless you have a Santander Mortgage the 123 cashbank is largely negated by the £2 fee.

Is it? I'd imagine most people could double their 'investment'. Indeed, I've just plugged my numbers in (they're not huge) and got a £48 annual cashback figure...and I don't have a Santander mortgage.


And then there's the 1-2-3 credit card with the 1st year fee waived for 1-2-3 current account holders.

sezegg

Those are a few of my reasons for looking at the 123 account, I've already applied for it now but obviously don't want make the wrong choice! I don't suppose it matters all that much, I think I'm just more unsure of which account to then use as my main one.

NoMore

YorkshireBoy wrote: »

Is it? I'd imagine most people could double their 'investment'. Indeed, I've just plugged my numbers in (they're not huge) and got a £48 annual cashback figure...and I don't have a Santander mortgage.


And then there's the 1-2-3 credit card with the 1st year fee waived for 1-2-3 current account holders.

I guess its maybe a bit better than I described but is that net of the Fee? or is it only £24 you make after the monthly fee?

I suppose the OP can still open the 123 for the cashback and open all of the other accounts to gain the better interest before using the 123 for savings.