Savings Advice Needed!

MollyMc

I have recently come into some money and want to know the best combination on getting the best interest. I have £28k. I am looking at changing my bank account to the Santander 123 but this only goes up to £20k. Not sure if the interest stops after the £20k?

For the remainder, what would be the best account - or should this be a fixed rate ISA - not sure if opening an ISA at this time of year is a good idea?

Any helpful advice would be appreciated

jimjames

You can do far better than cash ISAs as you have seen with the 123 account. Lloyds would give you 4% on £5k and TSB 5% on £2k. Time of year for an ISA is irrelevant, it's the interest rate that matters.

Also depends on what you need the money for? If it's not needed long term then could be worth looking at pension or S&S ISA options.

p00hsticks

MollyMc wrote: »

I am looking at changing my bank account to the Santander 123 but this only goes up to £20k. Not sure if the interest stops after the £20k?

Yes it does - so if you deposit £20k you really need to transfer the interest earned out each month

Ballard

p00hsticks wrote: »

Yes it does - so if you deposit £20k you really need to transfer the interest earned out each month

There's not really any need at all. You wouldn't earn any interest on the £40 received but being as that's about 17p a month if you earned 5% interest you might just as well leave it where it is to cover direct debits.

As has been mentioned, there are other options than the 123.

El_Torro

£20k in Santander, £2k in TSB and two accounts with £3k in each with Tesco. Done. The benefit of this as well is that you only need to worry about direct debits with Santander. The TSB will need a standing order though.

Also bear in mind with Santander that you will soon be paying a £5 monthly fee. This means that if your balance goes much below £20k it will seriously affect the net interest you earn.

colsten

Ballard wrote: »

As has been mentioned, there are other options than the 123.

Almost all of which are better than the 123.

Sam_J12

colsten wrote: »

Almost all of which are better than the 123.

That depends on the extent to which you can benefit from the cashback. I think for most people the cashback roughly cancels out the new £5 fee, so 3% on £20k is pretty good if you have already maxed out the available 4%/5% accounts. OP has £28k so Santander 123 is a decent option, especially if he pays his utility bills and council tax through the account.

colsten

You can get £30K into accounts w/o monthly charge, or accounts where the monthly charge can easily be avoided.

Pincher

Sam_J12 wrote: »

That depends on the extent to which you can benefit from the cashback. I think for most people the cashback roughly cancels out the new £5 fee, so 3% on £20k is pretty good if you have already maxed out the available 4%/5% accounts. OP has £28k so Santander 123 is a decent option, especially if he pays his utility bills and council tax through the account.

DD cashback for October totalled £6.22, so the DD cashback does cover the £5 fee.

There is a twist to this, as the interest will be tax free from 6th April. Currently, I get net interest £40.23 after tax £10.06 was deducted. So, it should be £50.29 from May 2016.

£1,000 interest tax free in the new scheme of things:

1 x Santander 123 £600 = £20k at 3%
3 x Regular Savers ~= £300
TSB & Tesco + Miscellaneous fills up £1,000, spilling over the brim.

The Santander is very flexible, so you can pay a big bill, then you top it up when the next Regular Saver matures, if no other funds are to hand.



Dividends up to £5,000 will be tax free soon.

I am going for a cash cushion of circa £30k, in Santander 123 etc., then hold dividend bearing shares for money above that, yielding tax free dividend.

I try to keep risky shares outside of ISAs, so if I have to sell at a loss, I can carry forward the loss. Losses inside ISAs do not count.