Where to put my money for decent interest!

costagirl

Really hoping someone can advise. I've got some savings, which was a critical illness payout for my son, who had a ruptured brain aneurysm at the age of 9 (5 years ago.) The payout was 25K - of which there is about 23k left, as some has been used for expenses of 5 years of hospital visits/stays in London.


I put 11k into a Post Office fixed term ISA for 2 years, earlier this year. I shouldn't need to touch this.


However, the other 11 and a bit thousand is at the moment in a Tesco Internet saver. This was the best rate I could find (using MSE website) earlier this year. What frustrates me is the rubbish interest rate - with a bonus, I'll get 1.35%. Which on 11K, after tax, will earn me about £120? Gee. The problem I have is that I need access to this money - although my son made an amazing recovery, we do still have a lot of hospital visits to London (every couple of months) and I lose earnings when I'm at hospital. The only other way I can see of getting a reasonable interest rate on 11K, with access on the slim chance that I need it, is a current account. I can't get my head round this. I've a personal current account with Lloyds, which I've had for donkeys years. We also have a joint Platinum account with Lloyds, which we use for AA cover, mobile phone insurance, travel insurance etc. Is there any alternative to setting up a current account for the 11K? It's the thought of direct debits, regular minimum pay ins that I can't quite face! What would any of you do?

YorkshireBoy

Since you're already with Lloyds, 3 of their Club current accounts will take £15K and pay 4% AER. Just be sure to keep >£4K in each (I know you're £500 short at the moment, but maybe income and scraping some from somewhere could make up the shortfall?).

If you don't have enough DDs already, then open another Tesco savings account and use a DD on each to pull a couple of quid a month from the Club accounts.

That's a very quick fix.

costagirl

Thanks for that; will I have to pay £5 per month for each account, with Lloyds club? Seem to remember there is a fee. I'll certainly look into it.

YorkshireBoy

costagirl wrote: »

Thanks for that; will I have to pay £5 per month for each account, with Lloyds club? Seem to remember there is a fee. I'll certainly look into it.

When you look into it you'll see it's easily avoided.

Ashen

Not meaning to ruin the suggestion, but can't you only have one Club Lloyds account?

https://www.lloydsbank.com/assets/media/pdfs/current-accounts/clublloyds_terms%20and%20conditions.pdf

If that's the case, if you want decent interest on the remaining 6K, I think the best way if willing to open multiple accounts and fulfill their criteria is a TSB Classic Plus account (5% pre-tax on £2000) and 2 Tesco current accounts (3% pre-tax on £3000 each).

I don't think the Tesco account require DD's, and it looks like TSB requires £500 per month deposit (can get around this by making two standing orders between another account to satisfy this criteria) and paperless banking.

YorkshireBoy

Ashen wrote: »

Not meaning to ruin the suggestion, but can't you only have one Club Lloyds account?

https://www.lloydsbank.com/assets/media/pdfs/current-accounts/clublloyds_terms%20and%20conditions.pdf

You can hold one sole and one joint account. There are two of them. ...

I've a personal current account with Lloyds, which I've had for donkeys years. We also have a joint Platinum account with Lloyds

Ashen

Ah yes, completely missed that - assumed the 'we' meant the son, wasn't thinking clearly!

redpete

costagirl wrote: »

Is there any alternative to setting up a current account for the 11K?

Very little zero risk alternative, as you've seen from the MSN guide savings account rates are rubbish.

It's the thought of direct debits, regular minimum pay ins that I can't quite face!

It's really not that complicated but of course it's up to you to decide whether it's worth an extra 3-4% a year.

What would any of you do?

Set up 3 or 4 current accounts.

costagirl

Thank you so much for the advice. I hadn't realised the tesco current account didn't require direct debits, will look into that. Will now try to calculate what 3 different accounts @ 3 or 4% interest will make, in comparison to the big chunk in the internet saver. Really appreciate your ideas, thank you.

ViolaLass

costagirl wrote: »

Thank you so much for the advice. I hadn't realised the tesco current account didn't require direct debits, will look into that. Will now try to calculate what 3 different accounts @ 3 or 4% interest will make, in comparison to the big chunk in the internet saver. Really appreciate your ideas, thank you.

3-4% is always going to be considerably more than 1.35%.

YorkshireBoy

costagirl wrote: »

Will now try to calculate what 3 different accounts @ 3 or 4% interest will make, in comparison to the big chunk in the internet saver.

Of course you should do your own sums, but you may find this website useful as an 'is it worth further investigation' tool...

www.bankaccountsavings.co.uk

It's not 100% accurate in it's projected returns*, but will be close enough for your purposes.


* It doesn't allow for non-compounding if the account is maxed.