Best way

lovemunkey187

I very recently came into a lump sum after the sale of my house.
Rightly or wrongly I have paid off my CC and ODs. So now I am looking for suggestions on how to keep a healthy bank balance.

A few details.
I had a lump sum after the sale of my house and the deposit for my new home and associated fees had been retained by my solicitor.
20k in a Santander123
2k in a TSB Plus
-5k which I used to pay off my Nationwide CC([STRIKE]need to check APR, but I know it isn't good[/STRIKE] it's 17.9%) and overdrafts on both Nationwide current accounts.

I currently have an income £1500 p/m (it is a little more than that but for the sake of argument I am rounding to the nearest 100), each month £1200 goes from NW to TSB via standing order.
The next day, that same £1200 goes into Santander(where all of my direct debits are issued from) and the following day £400 goes into my second Nationwide account for me to use for everyday things like groceries and petrol.

The flat I am moving into needs the kitchen and bathroom replacing and a coat of paint. After this outlay(looking at about 8k) I should still have a decent pot left.

I did have a couple of points when I started this post, but my rambling as made me lose them.:o
one of them was whilst my SAN and TSB accounts are at this level, is it worth transferring out any monies above the 20k and 2k limits, or just leave them as they are?

When I remember what the other points were I will edit this.

LXdaddy

lovemunkey187 wrote: »

I very recently came into a lump sum after the sale of my house.
Rightly or wrongly I have paid off my CC and ODs. So now I am looking for suggestions on how to keep a healthy bank balance.

...

I did have a couple of points when I started this post, but my rambling as made me lose them.:o
one of them was whilst my SAN and TSB accounts are at this level, is it worth transferring out any monies above the 20k and 2k limits, or just leave them as they are?

When I remember what the other points were I will edit this.

Firstly - congrats on paying off the debts - excellent first step.

Yes. Anything above the 20K and 2K figures is not earning interest - so open one of the other interest bearing accounts eg Club Lloyds 4% on 4K to 5K

In fact I would move 5K from my Santander 123 into a Club Lloyds because 4% is better than 3%

The other thing to look at is the regular savings accounts - eg TSB Monthly Saver will give you 5% on £250/month. Even if you don't have "spare" money at the end of a month you could be transferring £250 per month from Santander into that account and get 5% rather than 3% - you'd only run down your Santander A/C by £3K over the year.

And if you are keen on more of the same - look at the regular savings accounts with First Direct and M&S banks - both pay 6% - you will need to open current accounts with them to be able to get access to the monthly saver accounts but that should be fairly easy.




Edit to add - of course Nationwide has a regular saver account paying 5% too

lovemunkey187

Thank you for your reply

LXdaddy wrote: »

Yes. Anything above the 20K and 2K figures is not earning interest - so open one of the other interest bearing accounts eg Club Lloyds 4% on 4K to 5K

I will make that a ritual on the first of each month to skim the top of pool, so to speak

LXdaddy wrote: »

In fact I would move 5K from my Santander 123 into a Club Lloyds because 4% is better than 3%

The other thing to look at is the regular savings accounts - eg TSB Monthly Saver will give you 5% on £250/month. Even if you don't have "spare" money at the end of a month you could be transferring £250 per month from Santander into that account and get 5% rather than 3% - you'd only run down your Santander A/C by £3K over the year.

And if you are keen on more of the same - look at the regular savings accounts with First Direct and M&S banks - both pay 6% - you will need to open current accounts with them to be able to get access to the monthly saver accounts but that should be fairly easy.

Edit to add - of course Nationwide has a regular saver account paying 5% too

I am already getting 5% from the TSB acc I have, can I open another high interest savings account with them?
On a side note, I really should look at actually spending from this account and garner the 5% cashback for spending £100.
After reading your post, the Nationwide option could be the easiest. I am not sure I can deal with going through the rigmarole opening more accounts and setting standing orders up. If the 20k was going to be remaining intact over a longer period than a couple of months I may very well change my thoughts, but this is where the funds for my alterations will come from.

lovemunkey187

Decided, that whatever I skim off the top of my San & TSB pools I will just send back to the point of origin at Nationwide, and then when my Santander balance has dropped below 20k I will just send the skimmings from TSB there instead.

Rightly or wrongly I would like to keep my TSB acc at the limit. Psychologically it is more satisfying having one account that is maxed out, than having two lower figure ones.

LXdaddy

lovemunkey187 wrote: »

Thank you for your reply

I will make that a ritual on the first of each month to skim the top of pool, so to speak


I am already getting 5% from the TSB acc I have, can I open another high interest savings account with them?
On a side note, I really should look at actually spending from this account and garner the 5% cashback for spending £100.
After reading your post, the Nationwide option could be the easiest. I am not sure I can deal with going through the rigmarole opening more accounts and setting standing orders up. If the 20k was going to be remaining intact over a longer period than a couple of months I may very well change my thoughts, but this is where the funds for my alterations will come from.

With TSB I was suggesting opening a Monthly Saver Account rather than another current account. this will allow you to get another £250 per moth into the 5% interest bracket.


You said the alterations budget is £8K so even after that there is still quite a bit of money in the Santander at 3%. So you should be able to move £250/month of that over to a monthly saver at 5%. At the end of they 12 months the £3,000 plus interest can come back into Santander and start feeding the next year's account.


The thing about Monthly Saver Accounts is that the money doesn't need to be entirely NEW money (from salary that you didn't spend) it can come from EXISTING savings in a lower interest rate account.


Opening a new monthly saver with Nationwide or with TSB is roughly the same, setting up the regular standing orders is the same. You could do either or even both.


In your shoes I'd probably do Nationwide first as it can take £500 per month.

lovemunkey187

Just to see if I have got this straight in my head. and looking at a time after my alterations have been paid for.
So the £300 left over from my salary each month, plus skimmed shrapnel from TSB and topped up from San is paid into a monthly saver for the next 12months. At the end of the year the account is closed and the £6k +interest is paid all back into my Santander account.
I then open a new monthly saver and I do the same again?

Wouldn't me taking say £185 from Santander to top up the monthly saver be bad for the interest I would receive on the £12k in there? And if I am taking £185 out, would it be worth doing £435 into a Nationwide one as well as a TSB one?
Are these monthly saver accounts only good for 12months, before the interest drops below the 5%?

LXdaddy

I would put £250 per month into a TSB monthly saver and £500 per month into a Nationwide Flex Regular saver.

If you take that £750 from your Santander 123 account you will give up 3% interest on £750 but the rest of the balance in Santander is still earning interest at 3% (assuming you have not gone below £3000 in there). The £750 is earning 5% interest which is more than you have given up - so you gain more than you lose.

As long as your extra savings you have and the "shrapnel" from other accounts gets into an interest bearing account that will also be working for you.

lovemunkey187

Thank you LX, for your help. And I think I will go for it.

Eco_Miser

Just checking, your Nationwide account is the one paying 5%?

lovemunkey187

Eco_Miser wrote: »

Just checking, your Nationwide account is the one paying 5%?

The regular flex saver I have opened is(I double checked that). The current account isn't.

Eco_Miser

Well, unless that's because you're in the 12 month waiting period, either upgrade your existing account, or get a new one paying 5%.