Best idea for redundancy cash...

lynsayjane

Hi all,

My first post in this part of the forum, I've not had money to play with before!

I was made redundant last month and today received my redundancy package and am unsure what the best plan is for it. Luckily I got a job straight away so don't require it for general living expenses.

I received around £13k and intend on using it to do some work to my home. This will be a long term project, I don't expect to be spending it in a matter of months, it's probably going to be gradually over a year or two but I don't want to just leave it in my current account either as it'll end up disappearing while my shoe closet increases

I would happily break it into different amounts to put into different places but have never had so much to consider so am unsure what the best plan is. Any guidance would be greatly appreciated.

TIA
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macman

Santander 123.

kidmugsy

Get an interest-bearing current account (e.g. Santander 123): persuade yourself that only the interest will be spent on fripperies.

nearlyretired2004

..... I know previous poster only said 'e.g Santander 123', but as you've said youd be happy to split into smaller pots it would be easy to get most if not all into current accounts paying more.....Club Lloyds, TSB, Nationwide Flex Direct etc (if you can be botheree to open multiple current accounts .....as most of us on here do!!)

kangoora

Make sure you set up 2 direct debits and move £500 per month in and out of the account to meet the conditions to get interest. It doesn't need to be your salary, standing orders from and to your main account will be OK.

Personally i'd move, say, council tax and gas/electric bill to Santander, the cashback will likely pay for the account fee so you get a bit more interest through not having to pay the £2/month account fee.

lynsayjane

I have toyed with the idea of a Santander 123 account before, currently I'm with the Halifax so get the £5pcm in lieu of interest.

I presume the interest on the Santander account is higher say than that of an ISA or savings account?

nearlyretired2004

assuming you are a basic rate taxpayer the San 123 account pays 3% taxable (on balances over 3000) which equates to 2.4% after tax, which is better than you will get with any ISA at the moment,

As I said above, other accounts will pay 4 or 5 % (taxable) but on smaller amounts - between 2000 and 5000 in each account if you can be bothered to open/manage them. The advantage of San 123 is that if you cant be bothered you get a reasonable rate on upto 20000 in one account.

Personally I have all these accounts maxed out, with two SAN 123 accounts for the remainder of my cash....( from the days when you were allowed to open two)

Again, personally, I am closing two of my cash ISA's when they mature (tomorrow) and putting all the proceeds into San 123 accounts ..

lynsayjane

My evening shall now consist of opening a San 123 account and working out which DDs to transfer to take advantage of the cash back.

Many thanks
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