123 Account?

orwen

Hi,

Have read the MSE evaluation of the Santander price hike. Was advised to open a 123 about 6 months ago. There is £16.5K in there at the moment and I pay two utility services from the 123. I will shortly be retiring & was wondering if the 123 was still my best bet - after the hike - considering having my retirement paid into this account - plus lump sum initially, which I may subsequently invest?

Also hope to visit a Financial Advisor next month.

Many thanks.

bowlhead99

So with £16.5k in it you get about £500 a year interest, and you pay £60 a year for the account, so you're getting about £440 after costs, which is still over 2 and a half percent. And then you're getting more on top of the £440, because presumably the utilities are earning you cashback (and you could make more money by paying more things that pay cashback through the account). So your exact effective rate depends on how much cashback you get.

And the more you have in the account (e.g. £20k instead of £16.5k) the better effective interest rate you'll be getting, because the £5 a month costs don't go up simply because you added a few thousand pounds out of your retirement lump sum and start earning 3% on that.

The Santander is still a good account, there isn't another single account that pays interest of that level on that amount of money. You can get other current accounts with a higher rate of interest so you get more total money, but would have to split the money between multiple accounts and make minimum transfers to each of the accounts every month (e.g. £4-5k in one account, £3k in another, £2k in another, £2.5k in another and so on). If you can be bothered, it might be worth your time to set up, because some of them pay 4% or more.

The only other way of getting 3% or so without using current accounts is by locking your money away in something like a 5-year deposit, which is inflexible and might be frustrating if interest rates rise in a few years and better rates become available. Anyway the current accounts are listed at http://www.moneysavingexpert.com/banking/compare-best-bank-accounts but if you've been reading the articles then presumably you've found that page and the other useful ones.

You mention you will be getting a retirement lump sum, presumably you are aware that Santander only pays interest on the first £20k so you may need other accounts anyway after you've got that, if you're not going to invest your lump sum in S&S ISAs or similar useful things.

As a side note, make sure that the financial advisor you see is an independent financial advisor rather than one that's tied to your bank or one particular investment company, who would only be able to sell you what they have for sale.

orwen

Many thanks Bowlhead99,

The FA list themselves as "Independent Financial Advisers".

When I opened the 123 I gave instructions for monies to be transferred into it from another account once a month, but that never happened. I wrote to Santander but have yet to receive a response. Will update. Wasn't too impressed with that - I actually sat there and watched the guy do the paperwork on his computer for the transfers to take place.

However, it seems to make sense to have my pension paid in to the 123. The lump sum I tagged for investment some time ago, so it would only be in an account until I have advice on where to invest it.

Thanks again.

PS. Santander left a message saying I need to contact the sending bank, so their employee gave me misinformation when I opened my account. Presumably the missing income has thrown a spanner in the 123 works. Now I need to drive over to the other bank and set the transfer up again, this time manually.

badger09

I was just about to ask how you instructed Santander to have monies paid into it from another account:cool:

You need to set up a Standing Order from your other account asap. You can do this online.

If you let us know the approx amount you need to find a home for, we'll suggest some alternatives.

Are you single, or are joint accounts possible? I'm not being nosey:o as this can make a big difference to our suggestions. Also, are you comfortable operating several current accounts?

orwen

Thanks Badger,

Am single. Yes, that thought had occurred to me, I have set up standing orders in the past on my original (old) account without difficulty. This was the non-information I received; the misinformation was that the monthly transaction was to be set up at the Santander end, and I gave them account number and sort code of the sending bank for this to be done, and watched it all being entered on the screen. The other bank is across the road btw, you can see it through their windows >:-o

Santander are to phone me and I need confirmation of exactly how they want the monthly standing order set up.

Prefer to wait until the pension comes through before I look at those amounts, I'm afraid I have a lot on my plate at the moment - one step in front of the other for me just now

Two bank accounts - I don't know. I don't want to cancel the old one because there are so many bits and pieces tied up with it. I was with Santander anyway before, when they were Abbey National, so I haven't changed things that much really. I'm just irritated that everything was set up in great detail 6 months ago and now I'm having to go back and re-do part of it.

Many thanks again

kidmugsy

It sounds to me as if the incompetent bank owes you the 6 months of interest that you won't have earned at Santander.

orwen

kidmugsy wrote: »

It sounds to me as if the incompetent bank owes you the 6 months of interest that you won't have earned at Santander.

Thanks but it was Santander who requested my details so that the monthly transfer could be set up. This was not done and my old bank knew absolutely nothing about it. It's quarter to three (pm) and Santander has still not got back to me :-|

Update: they just phoned and are working on the case - were apologetic & helpful so that's a plus!

badger09

Hope Santander sorts it out quickly for you. You'll have to set up the Standing Orders yourself though, so the sooner the better?

Re 2 accounts - its really very easy to do. Many of us are juggling 20+:eek:. Not that I'm suggesting that to you.

It takes some initial organising but lots of us enjoy the challenge and are very happy to help you:)

colsten

orwen wrote: »

When I opened the 123 I gave instructions for monies to be transferred into it from another account once a month, but that never happened. I wrote to Santander but have yet to receive a response. Will update. Wasn't too impressed with that - I actually sat there and watched the guy do the paperwork on his computer for the transfers to take place.

I am sorry but this makes no sense. You cannot instruct any bank to regularly pull money into a current account from another bank. There will be no paperwork Santander has for this sort of transaction, and their computer system will also not have any functionality to do this, so you could not have watched them do that.

Are you sure you did not sign up for a current account switch? Did you sign anything? How did the £16.5K get into your 123 account?

Why did it take you 6 months to notice that the monthly payments from the other account did not happen as you expected them to happen?

kidmugsy wrote: »

It sounds to me as if the incompetent bank owes you the 6 months of interest that you won't have earned at Santander.

The OP didn't say they got no interest?

orwen

colsten wrote: »

I am sorry but this makes no sense. You cannot instruct any bank to regularly pull money into a current account from another bank. There will be no paperwork Santander has for this sort of transaction, and their computer system will also not have any functionality to do this, so you could not have watched them do that.

I did not say anything made any sense. I had already been told about the monthly £500 on MSE, I knew about that amount and this was discussed with the executive there. I said can I set it up there and then and he said yes, had I got the account details? I gave him my account number and sort code - he tapped those into his computer and said 'All set up'. We also set up the 2 utilities because, as I said, I already knew a little about the 123. At the end of the afternoon there was a formal handshake 'welcome to the 123' and not one whit spoken to me about setting up a Standing Order with my other account - that bank is literally over the road from theirs - I was led to believe this had already been done at the interview. Don't expect everyone to know bank procedures please, I can't see why an arrangement between banks can't be initiated this way but I am just the man in the street. I have set up several Standing Orders myself in the past and on line, it is no problem for me. I was not asked to do this - and why did the executive ask me for the details of my other account in the first place please?

Are you sure you did not sign up for a current account switch?

See below.

Did you sign anything? How did the £16.5K get into your 123 account?

I imagine that had something to do with attending an interview with Santander for several hours to set up a 123 account six months ago.

Why did it take you 6 months to notice that the monthly payments from the other account did not happen as you expected them to happen?

Because I am bereaved less than a year and there is possible litigation threatened in terms of Wills - are you a bank manager by any chance?

The OP didn't say they got no interest?

The interest currently reads '0'

orwen

badger09 wrote: »

Hope Santander sorts it out quickly for you. You'll have to set up the Standing Orders yourself though, so the sooner the better?

Re 2 accounts - its really very easy to do. Many of us are juggling 20+:eek:. Not that I'm suggesting that to you.

It takes some initial organising but lots of us enjoy the challenge and are very happy to help you:)

Thank you, Santander are sorting it - they said it may take up to seven working days but I am in no hurry as long as the account is finally set up properly. I can set up an on-line Standing Order blindfold, this will be done between now and next week, I have all the Santander details I need for this. Hopefully everything will be sorted when I get to the Financial Advisor from March onwards. I really appreciate the help I get on MSE, things happened very suddenly to me & it is taking some time to find myself again :A