Secondary A&L account

rubberbullet

Hi,

I posted this a while back, but I imagine I didn't really phrase it very well. I hope somebody could give it a quick glance...

I currently have a student account (even though I graduated well over three years ago), an interest-paying current account and an ISA all with RBS. My salary gets paid into the student account each month, from which I transfer a small amount into the ISA and a good wedge into the other current account, which I use to ringfence cash to cover bills.

Now I realise this is not the most efficient arrangement, but my credit rating isn't ideal, so I don't wish to jeopardise it by switching banks utterly. Therefore, would the following work?

Open an A&L Premier Direct Account through QuidCo. Smile at the cashback. Each month on the first of the month, transfer my rent/bill monies (about £700, mostly payable towards the end of the month) into the A&L account, and therefore allow it to accrue 25 or so days of interest, and then make these overhead payments from there? I know in effect I'd only have a small balance in the account when it is 'loaded', and clearly not for the entire month, but I feel that as interest is calculated daily and paid monthly, I would stand to gain more than the miserly amounts with the current account at RBS would accrue during that time.

I imagine this way I can make a little interest without jeopardising my relationship with RBS (and I don't wish to upgrade my student account to a fee-paying Royalties account without good reason!). I know this isn't the most interesting thought-provoking of questions, so any help is most appreciated!

Beate

Here are my thoughts: Having an ISA is a good idea but drip-feeding it doesn't give you the best interest, and I somehow can't imagine that interests on high-street bank ISA's are particularly wonderful. If you are going to open an A&L account, you could also go for the Premier Account which comes with a 12% Regular Saver. Drip-feeding that and then putting the lump sum you get from that in an ISA every year should give you a better interest. Have a look at the table with the best ISA's around, and do remember to transfer the whole balance when you are switching - never close an ISA and open another one, you will basically start the balance from scratch!

I have an A&L Premier Direct Current Account, and to be honest, I use it and the accompanying Plus Saver and Direct Saver purely to store my money. I have filled the Current Account with the maximum of £2,500 and transfer £500 in each month which immediately get transferred out again (to keep within their terms and conditions). This isn't to say that you can't do what you suggested, but if you are only ever going to put £700 in and pay all bills from it, you won't get a lot of interest, even with the current 6.5%, which is why I was thinking you might be happier with the Premier Current Account.

You could also think about opening a Nationwide account, they also take people with not so rosey credit ratings, although you only get 4.25% interest on the Flex Account when you input more than £1,000 a month, between £500 and £1,00o is only 1.25% (the same as on the Premier Current Account I believe). The nice thing about Nationwide are no fees for cash withdrawal abroad and a nice e-Savings account which pays 5.8% interest and is still flexible. They haven't got a really good Regular Saver though.

This should just give you a few things to think about, don't take my word for gospel, it is just my take on things.

rubberbullet

Thanks Beate!

I will pop by A&L and Nationwide in my lunch break and collect some information.