Maximising income with only a couple of new accounts

pyrex

Hello. I currently have two accounts with HSBC that earn very little interest. One is a Flex Saver that has a very low interest rate and the other is a Regular ISA which has an interest rate that seems to get smaller and smaller each year.

The idea of opening as many current accounts as you can is interesting and creative. My country of citizenship, however, requires me to report information each year about all bank accounts. There are steep penalties for failing to report each account and I'm reluctant to bear this additional annual administrative overhead/risk.

I'm looking to move away from HSBC for both accounts and wanted to find the optimum strategy using only two or three new accounts.

My initial plan would be to switch to:

• Santander 123 Account - put the maximum amount in and pay bills from this account
• Danske Bank ISA - transfer minimum amount to earn 1.6%

Does this sound sensible or do you have any suggestions? I'd be willing to throw in another new account if it made sense.

Thanks for your help.

ColdIron

A lot would depend on what sums are involved, it might not even be worth keeping your ISA

pyrex

It would be the £20k in the Santander account and then £30k+ in the ISA so I could get the 1.6% rate.

I'm earning around £30 a month on my current set up so I'm looking to balance the desire for a better return and the concerns expressed in the original post.

nushnush

you could move your isa to a flexible isa, then put the cash into high paying current accounts, before the end of the year (or before you have to start paying tax on it) move it back into your flexi isa, so the cash is still protected from the tax man for next year. thats if the isa tax free allowance matters to you

Vortigern

If you have a suitable partner you could open an additional Santander 123 account or two, to get 3% minus fees on up to £60,000

Santander allows partners to have one account each plus one joint.

pyrex

Thanks for the tips everyone. I didn't know about the flexible ISA.

I think what I'm going to do is open a Santander 123 account and then research opening another joint 123 account with my partner to try to fill up my personal savings allowance.

I will then research some of the ISA options and switch from HSBC as soon as possible. The fixed term ISAs look interesting. [edit: a lot of them only seem to allow one transfer in the fixed period so that's not as attractive]

nushnush

hi, im using the abundance flexi if isa, right now it is paying 2% interest fully protected, or withdraw then invest in other things then put cash back in before end of financial year to keep my original stake tax free, the 2% is available up until the FCA allow debentures to be included in isa's, expected to be some time next autumn

colsten

nushnush wrote: »

hi, im using the abundance flexi if isa, right now it is paying 2% interest fully protected, or withdraw then invest in other things then put cash back in before end of financial year to keep my original stake tax free, the 2% is available up until the FCA allow debentures to be included in isa's, expected to be some time next autumn

That's an "iffy" ISA which has no FSCS protection, like all the IF (iffy) ISAs. The website clearly states Your capital is at risk

Why would you risk your capital in a 2% account it you can get 5% or even 6%, fully FSCS protected? You have until next March to decide which, if any, ISA you want to put your cash into. Might as well earn some decent interest in a totally safe account until then, rather than risk it all for a measly 2%.

nushnush

your capital is in a bank and has full protection. a quote from the abundance website


"
Is Abundance covered by the Financial Services Compensation Scheme (FSCS)?

Any cash in your Abundance account that has not been invested into projects is held in a segregated client account at HSBC PLC and covered by the FSCS Deposit Protection Scheme. This means if you have cash in your ISA or other Abundance portfolios that you have not yet invested in projects you benefit from FSCS protection up to £75,000.
Please note, the FSCS Deposit Protection scheme covers you for £75,000 per financial institution, so in this case it covers any uninvested cash held in your Abundance account as well as any other money you hold elsewhere in HSBC or any of its subsidiaries.
Once your money is invested into Debentures you are covered under the Financial Services Compensation Scheme (FSCS) on investments. This scheme is different to the FSCS Deposit Protection Scheme described above. Under the FSCS investment scheme investors can claim up to £50,000 of compensation in the case where Abundance goes out of business and Abundance is proven to have have been negligent in carrying out our role"

full info on this link https://www.abundanceinvestment.com/how-it-works/faqs/

nushnush

as i said previously if you want to protect you tax free status then use a flexi isa (like the abundance isa), withdraw the cash and put it into high interest current accounts

bigadaj

nushnush wrote: »

as i said previously if you want to protect you tax free status then use a flexi isa (like the abundance isa), withdraw the cash and put it into high interest current accounts

You don't appear to understand what you have invested in which is a little worrying.

You are either getting no interest on uninvested money, or 2% return on an investment within which your capital is at risk.

As to whether the cash is covered up to £50k or £75k seems to be a point for discussion, though hopefully the average person would above nowhere near this amount in this product.

Please note the fscs protection for investments is effectively just against fraud and the platform going bust which would leave your underlying investments intact but needing to be managed by another broker.

Hopefully you do understand what you have invested in and have expressed it poorly, in my understanding at least.