Bank accounts? - 1st graduate job

Arvi

Hello everyone,

I've created this account because I need some advice on what bank account I should choose as I am starting my first graduate job in a global law firm. I aim to save £1,000 every month in addition to my 5% (own) + 7%(employer) pension contribution. It might be a bit too ambitious but I want to try. As such, I want to go for something that gives me good interest and easy access to the money in case I need it.

My 1st year gross salary is £42,000. I will go for the 5% pension contribution and have £10,500 student debt to repay (incurred under the old £3k fees). After using the income tax calculator I would take home around £2,300/month from which I plan to save £1,000.
I am currently with Lloyds as I had a student account and I am willing to move wherever it is more advantageous. Any advice would me amazing!

Many thanks,
Arvi

YorkshireBoy

A £42K gross salary and 5% pension contribution puts you in the basic rate tax band doesn't it?

As to which account(s), read the articles on the main site...

http://www.moneysavingexpert.com/banking/compare-best-bank-accounts

...and a recently established thread, including regular savers, here...

https://forums.moneysavingexpert.com/discussion/5374614

Arvi

Yeah you are right, forgot about the personal allowance thing (new to this). Thanks very much for clarifying that.

I had a look through that to get an idea but was thinking that maybe someone had good experience with a provider or has some tips on how to maximise benefits when switching accounts. There is a lot of info and a lot of options and it becomes confusing.

kidmugsy

If you convert to a Lloyds club account (current account) you'll get 4% p.a. on the £4k - £5k deposit band. You could also open a Club regular saver paying 4%. Or you could transfer to (say) TSB where you could get a switch payment, and then earn 5% on up to £2k, get a money off contactless card, and access to a 5% regular saver. Also consider a Nationwide Flexdirect account.

P.S. I'd have second thoughts about hiring a lawyer who thought £42k p.a. made him a higher rate taxpayer.

YorkshireBoy

Arvi wrote: »

I had a look through that to get an idea

Must have been more of a skim read, in 20 mins...even if you spent the full 20 mins doing it.

There is a lot of info and a lot of options and it becomes confusing.

OK, you're saving £1K per month but want access should you need it, so that rules out some of the regular savers. To see which ones you'll need to read the T&Cs. Here they are in 'benefit' order...

6% regular savers: First Direct, HSBC, M&S (total £800/mth)
5% regular savers: TSB, Nationwide (total £750/mth)
4% regular savers: Lloyds (£400/mth)

...so £1,950/mth

If that sounds like a lot of work, just open a pair of 5% paying current accounts with TSB & Nationwide. They'll be full in 4 months, due to max interest earning balances, by which time you'll have read the above referenced articles and thread in far more depth...so your understanding will be much improved.

Eco_Miser

Arvi wrote: »

I had a look through that to get an idea but was thinking that maybe someone had good experience with a provider or has some tips on how to maximise benefits when switching accounts. There is a lot of info and a lot of options and it becomes confusing.

Read through this board. There's lots on making the most of bank accounts.

Also, if you get confused easily, don't try switching accounts, just upgrade to Lloyds Club, open the Lloyds Club Monthly Saver (for £400 pm), and open (not switch to) further accounts with Nationwide and TSB and First Direct etc as needed. Read all the Terms & Conditions, getting interest or avoiding fees is conditional on you meeting them.

To make the extra £100/£150 from switching you need to open donor accounts with a different bank first. Don't go switching from the accounts that pay the good interest.

Arvi

Many thanks for the replies. Will read the relevant articles in depth and the above is a good starting point. I am very grateful.

atush

You probably wont need access to 100% of the 1K per month. So plit between a couple of regualr savers and money in current accts.

What is this money for? Will you need it in less than 5 years? If not, then once you have 3-6 months spending in cash, then look at opening a S&S isa.

PeacefulWaters

On the tax question, do you have any other employee benefits that could attract tax?

Car?
Healthcare?
Sale of holiday allowance?