Advice on what to do with my savings

Frazzels

Hello,

I’m looking for some advice with regards to the best bank account(s) and I understand from this site that the best way to do this maybe with multiple high interest current accounts.

Here’s some back ground information about me:

• I am 26 years old
• I live in Scotland.
• I earn roughly £2,100 take home per month.
• I currently have £8,500 saved so far
• My outgoings are 1,000, I save 600 and spend the remain 500.
• I am not a home owner and I am currently renting with my girlfriend.
• Together, we plan to buy a property in the next 6 to 12 months.
• We are both first time buyers.
• We both have no debt and do not have any overdrafts. Also, I have no student loan, she does.
• My credit rating is around 650 (according to noddle). Hers is something similar.
• I have a NatWest Silver? Credit card (opened Jan 15) which has an annual charge of £24. I always pay the balance in full before the balance is due.

First of all, as I will be a first time buyer soon, I plan to open a Help to buy ISA when they become available on December 1st. I will pay in the maximum of £1,200 (from my savings) on opening and then the maximum of £200 per month thereafter until we purchase a house. (My girlfriend will also do this as I read we are both allowed to do this even though it will be a joint mortgage).

I then plan to open the following accounts to take advantage of the interest paid out by them:

• Club Lloyds account (4% of upto £5000, >1500 pay in, must do=2DD)
• Nationwide FlexDirect account (5% up to £2,500, >1000 pay in, no must do)
• TSB Classic Plus account (5% up to £2000, >500 pay in, no must do)

I would split up my 8,500 savings as follows:

• 1,200 to the Help top Buy ISA Scheme
• 2,500 to the Nationwide FlexDirect.
• 2,000 to the TSB Classic Plus account.
• The remaining 2,800 to the Club Lloyds account.

Then use scheduled standing orders to move money around to meet the account minimum pay in requirements. An example of how this might work would be:
Day 1: My wages (2,100) is paid into the Club Lloyds account.
Day 2: SO of 1,000 from the Club Lloyds to Nationwide FlexDirect
Day 3: SO of 1,000 from Nationwide FlexDirect to TSB Classic Plus.
Day 4: SO of 1,000 from TSB Classic Plus back to Club Lloyds.

Once my savings reach 5,000 in the Club Lloyds account in 6 months’ time (I would be saving £400 per month as £200pm is going to the Help to Buy ISA), I would either A) withdraw the money from all three accounts and use for my mortgage deposit, or Open another high interest current account and start the process again with this account. (If the account has a min monthly pay-in then I would simply just add in a standing order step between Day 3 and Day 4.)

 
My questions are:

1. Help to Buy ISA - What's the catch? The only catch I see is that the most I can pay in is £200 per month. Am I missing something?
2. How quickly am I able to withdraw the money from the current accounts above? Instantly, without penalty?
3. Is the logic in my scheduled standing orders correct for moving money around to meet the minimum pay-in requirements?
4. Would I be better with an ISA? If so, what type of ISA?
5. Can I have an ISA as well as the Help to Buy ISA?
6. What would you do in my situation?

Thank you for reading. I really appreciate it.
Fraser.

xylophone

The Help to Buy ISA
http://www.moneysavingexpert.com/savings/help-to-buy-ISA

At the moment, interest rates are better on current accounts than on ISAs.

You can withdraw whenever you like from your current accounts but remember that the interest rate on Lloyds is tiered.http://www.lloydsbank.com/current-accounts/club-lloyds.asp

The 5% interest rate on the Flexdirect lasts only for one year.

Archi_Bald

Frazzels wrote: »

[*]The remaining 2,800 to the Club Lloyds account.

Club Lloyds only pays 4% if your balance is between £4,000 and £5,000. Until you have that money, you'd do better if you used a couple of Tesco current accounts.

Frazzels wrote: »

Day 2: SO of 1,000 from the Club Lloyds to Nationwide FlexDirect
Day 3: SO of 1,000 from Nationwide FlexDirect to TSB Classic Plus.
Day 4: SO of 1,000 from TSB Classic Plus back to Club Lloyds.

you can do your SOs all on the same day. Also, Club Lloyds needs £1,500 a month.

Frazzels wrote: »

 
My questions are:

1. Help to Buy ISA - What's the catch? The only catch I see is that the most I can pay in is £200 per month. Am I missing something? see write-up on the main site http://www.moneysavingexpert.com/savings/help-to-buy-ISA
2. How quickly am I able to withdraw the money from the current accounts above? Instantly, without penalty? which current accounts do not let you withdraw your cash instantly and penalty free?
3. Is the logic in my scheduled standing orders correct for moving money around to meet the minimum pay-in requirements? see above
4. Would I be better with an ISA? If so, what type of ISA? no. Only HTB ISA is worth your while
5. Can I have an ISA as well as the Help to Buy ISA? not a cash ISA, no
6. What would you do in my situation? I am not in your situation so I don't know

eskbanker

Archi_Bald wrote: »

Also, Club Lloyds needs £1,500 a month.

OP has this covered:

Frazzels wrote: »

Day 1: My wages (2,100) is paid into the Club Lloyds account.

AndyT678

Frazzels wrote: »

I have a NatWest Silver? Credit card (opened Jan 15) which has an annual charge of £24.

I think that I might have found a way to save you £24 per year...

http://www.moneysavingexpert.com/credit-cards/

Sam_J12

Frazzels wrote: »

1. Help to Buy ISA - What's the catch? The only catch I see is that the most I can pay in is £200 per month. Am I missing something?
2. How quickly am I able to withdraw the money from the current accounts above? Instantly, without penalty?
3. Is the logic in my scheduled standing orders correct for moving money around to meet the minimum pay-in requirements?
4. Would I be better with an ISA? If so, what type of ISA?
5. Can I have an ISA as well as the Help to Buy ISA?
6. What would you do in my situation?

1. There is no catch to help to buy ISAs. Your girlfriend can also open one so you can pay in £400 per month and £2k up front.
2. Any time you like, no penalty
3. Fine, but with so few accounts I would just do it by hand to avoid potential slip ups and getting overdrawn.
4. I think the help to buy ISA is the best option. Avoid a stocks and shares ISA as you need the money in the near future and it would be bad to have to withdraw your money after a market crash, crystallizing losses.
5. Yes, but you can't pay into another cash ISA in the same year. You can open a stocks and shares ISA but I don't think this is a good idea in your situation. You can retain ISAs from previous years.
6. I think your plan is excellent. The only thing I would recommend would be for your girlfriend to also open a help to buy ISA.

Good luck!

Frazzels

Thank you everyone for your replies and advice.

I took the £24 credit card out as I needed one in a hurry (I bank with Natwest) as I was going abroad and needed to hire a car and they required me to have a visa credit card. I kept using it after I returned home and it helped to boost my credit rating. I'll check out the link posted above and take out a new, card and ditch the Natwest one before the renewal in January.

Thanks Sam for your recommendation about my girlfriend to take out a help to buy ISA. She was planning to do this anyway as I read we are treated as inviduals, which is great!!

For the past year I have been closely monitoring my credit rating ahead of submitting a mortgage application in the near future. Will my credit rating take a hit when I open these three bank accounts? And how long do you think it will take to recover?

Frazzels

Also, I have some money in an ISA Bond. I'm not actually sure what this account is as my parents set it up when I was young. I believe is was an old policy of my parents so might not even be in my name but if it is, could this jeopardise my chances of opening a Help to buy ISA? TBH, I know very little about ISAs, in fact, I'm not actually sure what they are. I should probably go do some bed time reading...

Sorry, I'm not giving you much information - I will try to find out more about the account when I next see my parents.

Thanks

Eco_Miser

Once you get the Lloyds account to £4000 open the TSB Monthly Saver account for 5% on £250 a month; and later the Lloyds Club Monthly Saver for 4% on up to £400. These two last a year, but can be renewed.

Oh, and I would cut right back on the £500 per month spend.

Archi_Bald

I totally fail to see the point of a Club Lloyds account if £4,000 aren't readily available. It pays a miserly 2% for £2,000 to £3,999.99.

jimjames

Archi_Bald wrote: »

I totally fail to see the point of a Club Lloyds account if £4,000 aren't readily available. It pays a miserly 2% for £2,000 to £3,999.99.

I agree. I can't see why you wouldn't use Tesco first as that's 3% with no catches and can take up to £6000 per person.