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Santander 123 Current Account for Savings?

ZacharyJohn
Posts: 31 Forumite

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!
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!
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Comments
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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.0 -
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?0 -
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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/5005862Remember the saying: if it looks too good to be true it almost certainly is.0 -
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)
Tesco0 -
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.0
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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?0 -
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.Remember the saying: if it looks too good to be true it almost certainly is.0 -
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.0
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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?0
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