Santander 123 Current Account for Savings?

ZacharyJohn

Hi guys, I was wondering whether I could get some advice...

I currently have a Santander Everyday Current Account - very basic, no interest, etc - and am looking to set up a savings account.

Looking at this site, the Santander 123 Current Account seems perfect because of the interest rate it offers (3% with a balance of over £3,000) but what am I missing?

The best Cash ISA's I can find sit at around 2.3% and whilst I know the interest isn't taxable - unlike the 123 Current Account of course - it still seems a lot less than the Current Account.

My income is around £850 per month and my outgoings lie at around £250 per month if that helps.

Any advice would be greatly appreciated!

Archi_Bald

Lots os people use the 123 as a savings account - as you say, it pays better interest than ISAs even after BR tax. There are also others that pay 3, 4 or even 5% AER. And there are regular savers that pay 4 and 6% AER.

You need to read the T&Cs and comply with them in order to receive interest.

ZacharyJohn

Thanks so much for the quick reply Archi Bald,

I've been looking online for some of the best interest rates but haven't been able to find any above the 3% mark - could you recommended some that are higher?

xylophone

http://www.moneysavingexpert.com/banking/compare-best-bank-accounts

jimjames

ZacharyJohn wrote: »

Thanks so much for the quick reply Archi Bald,

I've been looking online for some of the best interest rates but haven't been able to find any above the 3% mark - could you recommended some that are higher?

You've quite successful in managing to avoid seeing any info on them!

https://forums.moneysavingexpert.com/discussion/5005862

AndyPK

ZacharyJohn wrote: »

Thanks so much for the quick reply Archi Bald,

I've been looking online for some of the best interest rates but haven't been able to find any above the 3% mark - could you recommended some that are higher?

They tend to only allow you to earn interest on small amouts around £2K.

e.g TSB
Nationwide (limited to 1 year)
Tesco

colsten

Interest paying accounts take £50,000 in various sole accounts, paying at least 3% AER. So the £20,000 Santander isn't even catering for half.

ZacharyJohn

Thanks for all the replies, guys.

After reading the 'How to Start Saving' article that recommends maxing out the interest on a current account before moving onto any other savings strategies, it seems that for the amount I have at the moment (a little under £2,000) getting a TSB Classic Plus account would be best (5% on the first £2,000 and £100 to switch) before moving to the Santander 123 in a couple of month's time when I have over £3,000.

Does that seem plausible?

jimjames

ZacharyJohn wrote: »

Thanks for all the replies, guys.

After reading the 'How to Start Saving' article that recommends maxing out the interest on a current account before moving onto any other savings strategies, it seems that for the amount I have at the moment (a little under £2,000) getting a TSB Classic Plus account would be best (5% on the first £2,000 and £100 to switch) before moving to the Santander 123 in a couple of month's time when I have over £3,000.

Does that seem plausible?

I don't know how you worked that out but it's not what I'd do.

I wouldn't be bothering with Santander until I had at least £15500.

You can get 5% on £4500 with tsb and nationwide. Then 3% on £6000 with tesco but once you've built that up you can get 4% with Lloyd's £5000 which I'd switch from tesco.

Then built up tesco again. There's no point using Santander with under £3000 and little point when you haven't maxed out better rates.

colsten

I agree with your assessment from a savings point of view, JJ. But getting a 123 account might also be worth it simply for the cashback if you have the appropriate DDs, and even if you never use the account for savings. I net between £10 and £12 a month from them, after the £2 monthly fee.

ZacharyJohn

Thanks for the reply jimjames,

I've had a look on the TSB website and it says 5% on £2,000 (not £4,500) and the Nationwide website says 5% on £2,500 (not £4,500).

Tesco also says 3% on £3,000, not £6,000.

I'm a bit of a newbie at this whole savings thing but am I reading it wrong or missing something?