Choosing a new bank for someone who gets paid with no tax?

Fryy

Hi all,

This forum is amazing. There are so many helpful people. I'm a longtime reader but first time poster. I tried searching for advice but my situation is a little niche (but hopefully not so niche that it won't be relevant for others too), so I would appreciate some help.

To make this as simple as possible, here are the key facts:

I'm a PhD student, so I'm given funding of £23,000 a year to survive, in either quarterly or monthly installments. However, the key point is that this is a stipend, so I do not have to pay tax.

I have about £4,000 saved up at the moment (+ money to survive until the next quarterly installment).

I'm currently with Natwest because I signed up for the free young person railcard 5 years ago, but sadly I am no longer a young person so I have no reason to stay loyal to Natwest anymore.

If anyone has any advice on (i) a current account or (ii) an ISA, I would very much appreciate that.

Thanks all!

Archi_Bald

It's not worth doing an ISA until you have over £15K to save, and even then, a cash ISA might not be the right thing. You can presently get better interest than in ISAs in current accounts for some £50,000.

From next April, banks and building societies pay gross interest and there will be a savings interest allowance. Before then, you can give your bank an R85 form so they can pay you gross interest.

HappyMJ

If you're not paying tax then a high interest earning current account would be best.

You could contribute to an ISA but I wouldn't as the rates are much lower than current accounts.

Best interest you can get today is 6% in a regular saver with HSBC if you can get a HSBC Advance account.

Archi_Bald

HappyMJ wrote: »

Best interest you can get today is 6% in a regular saver with HSBC if you can get a HSBC Advance account.

For completeness, M&S and FD do the same 6% AER regular saver. But a regular saver is of little use if you want to deposit a £4K lump sum.

G_M

A regular saver can give good interest (as said, 5-6%) but is probobly not appropriate. It requires a regular monthly credit, sometimes a fixed amount, and often with withdrawal limitations.

You clearly need somethig more flexible where you can deposit larger, less regular amounts, with unlimited access.

An interest-paying current account eg Santander (3% +other benefits up to £20K); BOS (3% up to £5K).

Or if you're happy with online, 2 x tesco current accounts (3% to £6K). Plus a linked saving account for any amounts over the limits.

Lots of threads on these (and others).

And as archie says above, register an R85 form for each account to avoid tax.

Archi_Bald

G_M wrote: »

An interest-paying current account eg Santander (3% +other benefits up to £20K); BOS (3% up to £5K).

Santander would be one of the worst choices of all interest-paying current accounts for £4K because of their monthly fee. Plenty of non-fee options around, and accounts that pay 4 and 5%.

Fryy

Such as whom?

Also, I should add, I only have one direct debit, wish very annoyingly seems to limit my current account options....

Many thanks for the responses all.

GTR_King

Try TSB Classic plus 5% or Nationwide Flex Direct 5%

they don't charge any fees

Fryy

thanks, however TSB seem to require me having 2 direct debits which I do not have.

Nationwide Flex might be good, however is HSBC advance a viable option? There's no interest but the regular saver is 6% interest I think? I think I can just about meet the £10,500 per 6 month minimum (do they count my transferring money from my previous bank?) and then the regular saver is 6% interest?

Archi_Bald

Fryy wrote: »

thanks, however TSB seem to require me having 2 direct debits

they don't. You need to read the T&Cs.

Fryy wrote: »

Nationwide Flex might be good, however is HSBC advance a viable option?

HSBC they may not accept you for the Advance account, and they are known to take forever with opening accounts. Their normal regular saver rate is 4%. Do you understand what a regular savings account entails? And why wouldn't you go for easier 6% Regular Savers? And a bank that pays interest for money in current accounts?

Archi_Bald

Fryy wrote: »

Such as whom?{/quote]you you start here: http://www.moneysavingexpert.com/savings/savings-accounts-best-interest.

Fryy wrote: »

Also, I should add, I only have one direct debit, wish very annoyingly seems to limit my current account options....

Getting extra direct debits is one of the easiest problems to resolve, as has been mentioned dozens of times on the Forum, and a longtime reader would have noticed that. Hint: Tesco savings accounts.