Thinking of putting isa cash into Santander 123-thoughts?

laneycakes

Hi

I've got two isa's -one at approx £5000 and the other at just over £9000. Both accounts gave paid decent interest until now-but rates on both are about to drop through the floor (below 0.5%)

So I'm thinking of switching both into a Santander 123 account. I can open it as a new account-change two of my current direct debits to fulfil that requirement (prob phone as one as I also would get 3% cash back) and I could transfer £500 from my Barclays current account each month as a standing order and then simply transfer it back each month if I want to (I think that's allowed!)

By my reckoning if it's 3% (2.4%net) then I'd earn around £330 interest a year?is that right? I know I'd pay £24 in acc fees but it seems to make much more sense than an instant access Isa as they have much worse interest rates.

Am I missing anything? Seems a little too good to be true!

Thanks for any advice!

masonic

You are not missing anything. Many do this. There are 4% and 5% current accounts that pay interest on lower balances if you can be bothered. Next tax year the savings allowance kicks in so you may not even need to pay any tax on the interest. You may be able to get enough cashback on your direct debits to offset the fee.

colsten

And drip-feeding regular savings accounts can increase the interest you can earn from your £14,000 even more. http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#drip

colsten

From the MSE Savings Guide

KGriff

Yes I think the Santander 123 Current Account is a sensible option and from April next year you should get the first £1000 of interest tax free. So it's a win, win situation in your position. The only downside is the monthly fees.

Likewise (as mentioned) you could consider the TSB current account plus, which does not require any direct debits, but you would also need to divert £500 per month in a 'round robin' standing order transfer ... That account pays 5% upto the first £2000... and no monthly fees.

Both accounts are easy to open online (subject to credit checks etc) and each are easy to manage once you have the standing orders in place.

Roll on April, when some savings are tax free ... Thanks Mr Osborne!

laneycakes

Thanks all. One last question - will I have to physically take the cash out of my ISA's and pay the actual cash into the Santander account or could I transfer it electronically? Thanks

masonic

It depends on your ISA providers, but I'd think most would allow you to withdraw by electronic transfer to a nominated bank account.

iainscomputer

I'm in the processs of doing the same thing, I've been looking at ISA rates & they have dropped so low, I can't even be bothered with them. All my cash is spread over 2 Natwest current accounts.
I've opened a 3rd Natwest current account & I'm switching this one to a Santander 123 account via Quidco to get the £35 cashback.
I can fund it each month & I have the 2 direct debits set up aswell.

ShowUsTheMoney

Love my Santander 123 3% account & TSB 5% account. It's a shame that the TSB only pays on the first £2000 - nevertheless both offering better returns than current ISA's.

jimjames

ShowUsTheMoney wrote: »

Love my Santander 123 3% account & TSB 5% account. It's a shame that the TSB only pays on the first £2000 - nevertheless both offering better returns than current ISA's.

If you have a partner you can have £6000 with TSB and £5000 with Nationwide, both at 5%.

ShowUsTheMoney

How do you work the £6k out at TSB ? Separate accounts or still joint ?