Can I have both a Santander 123 account and First Direct lined to Regular Saver

Claire1175

Hi, I haven't reviewed where I put my savings in an age.

From Martin's advise (Money Fountain) it looks as though I should put a lump sum (£20k) in a best bank account like Santander 123 (3%) and set up a current account with someone like First Direct linked to the Regular Saver (6%).The rest can go into ISAs.

Some questions..

Is there any conflict in taking out both Santander and First Direct accounts?

And, if First Direct offer a better interest at 6% then shouldn't I put it all in there? Is there a maximum amount that I can initially deposit and then dripfeed across to Regular Saver?

There's mention to being able to avoid paying tax on interest (40% rate) by transferring all money across to an ISA before 5 April 2016. Is tax only calculated at one point in the year, based on what's in the account at the time? How does this work?

Feedback really appreciated.

Thanks
Claire

colsten

Answers in no particular order:

You can have as many current accounts as you manage to get. I currently have some two dozen.

You can get about £50K into current accounts that pay great interest. Most of them pay better interest than Santander as they don't have a compulsory monthly charge - although if you have the right DDs, you might be able to earn more than the monthly charge at Santander. http://www.bankaccountsavings.co.uk/

You cannot "put it all" into the FD, or any other, Regular Saver as you are limited to depositing just a few hundred pounds a month.

All interest gets calculated based on the amount of money in an account at the end of a day. How interest is actually paid depends on the accounts - some pay monthly, some annually, some on a specific date. Check the T&Cs of the account.

20% tax currently gets deducted at source, and if you are a HR tax payer, you have to declare your interest income to the HMRC. From next tax year, banks will stop to deduct tax and all BR tax payers will get a £1,000 annual allowance. HR tax payers will have an allowance of £500 only. Any interest above £500/£1,000 must be declared by the account holder from 2016-17 onwards.

If you want to save tax as a higher rate tax payer, you should consider increased pension contributions. Cash ISAs have very limited value to most people. S&S ISAs are most likely better value for long term 'savings'.

jennifernil

I would look at TSB (5% on £2k), Club Lloyds (4% on £5k + a 4% regular saver), BOS Vantage (3% on £5k on 3 accounts), also Nationwide, Clydesdale, Tesco and Santander.

Some allow both sole and joint accounts. I have 14 sole and 5 joint at present, but not all pay interest.

Santander give cashback on some DDs, so move what you can that qualifies to them as they have a £2 pm account fee.

Then the M&S, First Direct and HSBC regular savers pay 6% so you need to open their current accounts to get those.

Then you could look at ISAs.