Saving/ISA account suggestions

TheLittleSaver

Hello everyone!

I am thinking to open a saving account and hope you could share your knowledge with me and direct me to the best choice, because it's the first time for me.
My current situation is:

- I have a basic bank account with SANTANDER uk and I don't pay any household bills, I just pay the rent for my room (or maybe I should consider that as a household bill?)
- I know that SANTANDER has a current accounts that gives you up to 3% interest but as I said I don't have any direct debits set up. Besides, it's not an ISA account, so I should pay txes from the interest, right?
- I am not the kind of person who chases the best deal and move his money around every month.. of course I want the best deal, but also don't want to worry about it so often, just putting my money somewhere and leaving there for a while so I can get interest.
- I had a look around and I know there is kind of ISA accounts, thanks which I can earn interest tax free? So I found the "Skipton 5 Year Fixed Rate ISA". What do you think about it? Or maybe there is a better ISA account out there?

To sum up, considering my situation, what do you think would be the best saving account for me?
I hope I was clear enough and sorry if I wasn't. Please let me know if there is anything else you need, any other information that might help.

thank you very much everyone and have a lovely week-end!

YorkshireBoy

TheLittleSaver wrote: »

- I know that SANTANDER has a current accounts that gives you up to 3% interest but as I said I don't have any direct debits set up.

DDs are easy to find.

Besides, it's not an ISA account, so I should pay txes from the interest, right?

If you're a tax-payer, yes. But 2.4% net is significantly better than 1.6% gross...is it not?

To sum up, considering my situation, what do you think would be the best saving account for me?

How much do you have saved now as a lump sum?
How much will you be saving each month going forward?

TheLittleSaver

Thank you YorkshireBoy for the fast reply.

Sorry, where do 2.4% and 1.6% come from? The "Skipton 5 Year Fixed Rate ISA" gives 2.3%, right?
I would be able to put around £4.000 in the saving account, but I am not sure about how much I will be saving every month, because I work as freelance, so my income is really variable.

YorkshireBoy

Santander 1-2-3 offers instant access, so I assumed that was in contention.
2.4% is the after tax rate on the 1-2-3. 1.6% is a ballpark figure for a corresponding instant access ISA.

Do you really want to put all the money you have(?) in a 5-year ISA...presumably with hefty penalties for access...if any at all?

It's very difficult to suggest anything specific when you don't know what you'll be adding each month. However, with £4K you can make 4% after tax in a couple of current accounts...albeit £2K of it only for a year.

G_M

Might you need access to this money. A 5 year fix means you cannot touch the money for...... 5 years (in most cases).

If you are absolutley sure you don't/won't need access then yes, a 5 year fixed ISA is worth considering.

But there again, the fixed rate (2.3%) will be the same throughout those 5 years. If the bank of England increases base rate, say next year, you moght find all other rates go up, but you'll be suck on 2.3%......

I'd go for higher rate, with instant access, non ISA. As Yorkshireboy says, pay tax on the Santander 123 and you'll ean 2.4% after tax, and with instant access.

TheLittleSaver

Thank you G_M
Answering to YorkshireBoy, I didn't say that it's all the money I have, so I considered to keep a "safety" margin and put the rest in the saving account. Anyway I must admit 2.4% from Santander is still better than the 2.3% of Skipton (without even tying up my savings for 5 years).

Which are these two current accounts you are talking about? Or maybe should I go for the santander one?

YorkshireBoy

You can get up to £50.5K in current accounts at >3% AER (2.4% net)...

5%:
£2K @ TSB (+ £250 a month in their 5% regular saver)
£2.5K @ Nationwide

4%:
£5K @ Lloyds (+ £400 a month in their 4% regular saver)

3%:
£15K @ BoS (need 3 accounts)
£6K @ Tesco (need 2 accounts)
£20K @ Santander

Unless you have qualifying DDs for cashback (to offset/eliminate the £2 monthly fee), then Santander should be the last one you open. That's if you're out for maximum return of course. If you want ease, and have a good bit less than £20K, then maybe it should be the first.

Cisco001

Get TSB.
All you need is pay in 500 a month, don't need direct debit

TheLittleSaver

Thank you very much YorkshireBoy for the accurate list! I will have a look hopefully tomorrow and see if I come to a decision, in the meantime if there is anyone else who has some more suggestions about it guys please let me know!

Thank you again

YorkshireBoy

All the suggestions you need are contained in two articles here...


http://www.moneysavingexpert.com/banking/?_ga=1.15395126.1607593156.1438032346


See "Best Bank Accounts" and "Top Savings Accounts"

Cisco001

YorkshireBoy wrote: »

You can get up to £50.5K in current accounts at >3% AER (2.4% net)...

5%:
£2K @ TSB (+ £250 a month in their 5% regular saver)
£2.5K @ Nationwide

4%:
£5K @ Lloyds (+ £400 a month in their 4% regular saver)

3%:
£15K @ BoS (need 3 accounts)
£6K @ Tesco (need 2 accounts)
£20K @ Santander

Unless you have qualifying DDs for cashback (to offset/eliminate the £2 monthly fee), then Santander should be the last one you open. That's if you're out for maximum return of course. If you want ease, and have a good bit less than £20K, then maybe it should be the first.

Lloyd's need DD.