Lump Sum Saving & Regular Monthly Saving

enthusiasticsaver

Nationwide Flex direct for £2500 and TSB Classic for £2000 both at 5%. Regular savers with Nationwide and TSB and First direct will take care of your £1000 per month with them earning 5 or 6%.
Remaining £15000 divide between Lloyds (4%) and BOS or Tesco at 3%. I do use a Santander 123 but then I am sheltering around 50k in current accounts and I earn around £8-£9 cashback per month on bills which covers the fee.

Eco_Miser

AdamW85 wrote: »

Eco Miser you say regular Savings accounts for the £1000 a month and current accounts for the £20000. I don't understand why not to put the money in the one with highest interest rates, which currently appear to be current accounts?

I'm telling you to put the money in the one with highest interest rates, which currently are Regular Savers.
You can get 6% on £800 a month, 5% on £750 a month and 4% on £400 a month, all of which beat the 3% Santander gives, so dripfeed £950 a month from Santander as well as your £1000 new money. (NB at some point this will take Santander below £3000, so just before then, you might want to re-arrange the various holdings to maximize the interest again.)
Also make plans for the accommodation of £24000 in a years time when the regular savers mature. You can re-start the RSs, assuming they're still available, but you need a home for it first. Personally, I'd put the full allowance into an S&S ISA, but that's me.

AdamW85 wrote: »

I have left the large sum in Santander 123 as don't see the point in spreading the 10.5k across multiple accounts that pay the same %. Good or bad choice?

Bad choice, as Santander charge a monthly fee which reduces the effective interest rate, the less you have in, the lower the effective rate. Also if you make full use of Regular Savers your balance will sometimes drop below £3000.

AdamW85 wrote: »

Lastly, what is best to do with the money that is accrued as interest monthly? Leaving it in is not efficient as does not earn any more interest (compound interest theory)

Move it out as part of the merry-go-round - or by the required Direct Debits. As an example, my Lloyds interest effectively pays my electricity bill.

AdamW85 wrote: »

Whilst the average interest is not bad (gross shown in the image), I have read on here people getting~4&5%. Not sure how though!

Use of Regular Savers, and being first to the party, when multiple accounts at 5% were available.

owitemisermusa

Something's been bugging me, for all these accounts, you have to keep yourself under the limit for interest to be paid. What about those same interest payments taking you over the threshold? Doesn't that complicate matters even further with having to lop off the extras to yet more accounts when interest takes you over??

Superscrooge

owitemisermusa wrote: »

Something's been bugging me, for all these accounts, you have to keep yourself under the limit for interest to be paid. What about those same interest payments taking you over the threshold? Doesn't that complicate matters even further with having to lop off the extras to yet more accounts when interest takes you over??

I think I can set your mind at rest!

eg. If the account says interest is paid on balances up to £3000 it doesn't mean that if your balance strays over the £3000 that you won't get paid any interest, just that you won't get interest on any funds in excess of the £3000

You will still get interest on the first £3000

AdamW85

Thanks again for the help Yorkshire Boy and Eco Miser.

Yorkshire boy regarding the interest payment date, it wont make much difference to the actual interest, so what I put down into excel is just a generic breakdown. Still hoping its fairly accurate though!

Regarding the Santander 123 the consensus is that to use it last of the 3% due to the monthly fee? This makes sense to me and was an oversight when putting something together yesterday. I will make use of the various DD requirements though. I assume by 'clean' accounts you mean ones with no fee?

AER/Gross....Makes no difference really once a formula is set up. Just makes it easier to compare accounts at face value I suppose.

Eco Miser, another thorough post. Appreciate the help!

I currently have a HSBC Advanced so will look this evening to add in their Regular Saver and also look to add the regular savers from Nationwide, TSB and first direct. Although I assume for this I need one of their current accounts to get it.

You can get 6% on £800 a month, 5% on £750 a month and 4% on £400 a month, all of which beat the 3% Santander gives, so dripfeed £950 a month from Santander as well as your £1000 new money. (NB at some point this will take Santander below £3000, so just before then, you might want to re-arrange the various holdings to maximize the interest again.)

With the above are you suggesting putting the 20k into a Santander 123 account and then dripfeeding £950 from it each month to various accounts? Doing this would give me ~ 17 months before it dropped below 3k. Doesn't this go against the general consensus to not use the 123 account until its the last of the 3% left? My first attempt of putting a package together see's average higher return than this? Or am I missing something?

Also make plans for the accommodation of £24000 in a years time when the regular savers mature. You can re-start the RSs, assuming they're still available, but you need a home for it first. Personally, I'd put the full allowance into an S&S ISA, but that's me.

20% interest in a year? Again am I missing something?

”Move it out as part of the merry-go-round - or by the required Direct Debits. As an example, my Lloyds interest effectively pays my electricity bill.

You must live in a 'very' efficient home then with an electricity bill that low?!


I really appreciate the help so far! Im quite a stickler for detail, so like to really understand how these things work. Up until now i've been a sole account owner and not paid any interest in the various bank accounts available (no pun intended!)

AdamW85

A little late but Happy New Year to you all.

Eco Miser, any advice/help on my questions above?

I've been away for a few weeks so not made any progress with this, but looking to get something sorted in the next couple of weeks.

enthusiasticsaver

colsten wrote: »

In most cases, the 123 is the lazy option for people who don't care how much / how little interest their money makes. In isolated cases, the 123 is also the option for people who don't know any better. In very rare cases, the 123 is the best choice.

I think you are being a bit unfair here. There are some people who like their banking to be simple and at least Santander 123 pays 3% over £3k and if people did not care about how much or how little their money made it would be sat in Barclays or Nat West earning nothing. For some people the 123 offers a reasonable rate of return for very little outlay of time, a precious commodity and if you have any more than £30k then it serves a purpose.


I do myself do the 5% loophole and have 10 current accounts (including 1 Santander 123) and 4 regular savers but it does involve setting up standing orders and moving money around and of course the time it takes to open up the accounts in the first place. I don't think you should be knocking people who would prefer not do that but maybe point out nicely that if they don't mind spending a bit of time they can get 5% or 6% rather than 3%. Calling them lazy is just plain rudeness.

enthusiasticsaver

Adam if you have £20k, I would start with the TSB Classic Plus and Nationwide Flex Direct which both pay 5% on £2000 and £2500 respectively. The Nationwide is just for 12 months though so make sure you move it out by then. This also gives you access to their 5% regular savers which you can put a maximum of £250 in the TSB one and £500 in the Nationwide. You could of course also switch an old account to First Direct to get the £150 switching bonus and then open their regular saver which pays 6% on maximum £300 per month. That takes care of your £1000 per month regular saving.


The remaining £15500 of your lump sum could go into Lloyds club (£5000) earning 4%, Bank of Scotland or Tesco for the remaining £10,500. This does involve you opening up to 6 current accounts and 3 regular savers but there are no fees if you do the 5% loophole and you will be earning from 3 - 6% on all of it.

AdamW85

@Eco Miser, can you provide more information on your statement:

'Also make plans for the accommodation of £24000 in a years time when the regular savers mature'.

Maybe it is a typo or I am missing something?!

AdamW85

For reference this is my current plan. Any thoughts would be appreciated.