Would it be better to put my savings into a current account instead?

ah23

I currently have (5k approx) savings in a savings account which offers a pitiful 0.25% interest. I've finally found the time to sort my finances and re-jig things a bit, and I've found that many current accounts at the moment actually offer more attractive interest rates than savings accounts.

I currently bank with Santander, and this is my primary account. My savings account is currently with Halifax, but I have looked at Tesco Bank which offers 3% interest on anything up to £3000. So does this mean Tesco will give me £90 interest per month on my 3k provided I just leave it in there? It sounds too good to be true.

Is it better to swap my savings account for another current account with better interest rates (providing I use it as a savings account and not dip into it)?

(Postgraduate Student so no regular income atm, which is why Tesco Bank is attractive as it requires no min. monthly pay in)

Thank you

Alter_ego

Afraid your figure is too good to be true. The interest is an annual rate

HappyMJ

ah23 wrote: »

I currently have (5k approx) savings in a savings account which offers a pitiful 0.25% interest. I've finally found the time to sort my finances and re-jig things a bit, and I've found that many current accounts at the moment actually offer more attractive interest rates than savings accounts.

I currently bank with Santander, and this is my primary account. My savings account is currently with Halifax, but I have looked at Tesco Bank which offers 3% interest on anything up to £3000. So does this mean Tesco will give me £90 interest per month on my 3k provided I just leave it in there? It sounds too good to be true.

Is it better to swap my savings account for another current account with better interest rates (providing I use it as a savings account and not dip into it)?

(Postgraduate Student so no regular income atm, which is why Tesco Bank is attractive as it requires no min. monthly pay in)

Thank you

TSB pays 5% interest on balances up to £2,000.

edit: oops...brain not working today.... it is TSB not Lloyds.

Aretnap

HappyMJ wrote: »

Lloyds pays 5% interest on balances up to £2,000.

You're probably thinking of TSB there. A Club Lloyds account will pay 4% interest on balances between £4000 and £5000, with lower rates applicable if the balance goes below £4K.

To answer the main question though, yes the OP would be better off with a high interest current account (or a couple of current accounts) than a bog standard savings account. Remember that you can have more than one current account if you like, and that the minimum monthly pay in doesn't have to be your salary - you can meet it by transferring money from one account to the other and back again, which is very easy to set up with a couple of standing orders.

ah23

Alter_ego wrote: »

Afraid your figure is too good to be true. The interest is an annual rate

I thought so, thanks.

HappyMJ wrote: »

Lloyds pays 5% interest on balances up to £2,000.

Thanks for this. I'm actually looking for an account with no monthly pay-in. I just want to treat it as a savings account, just to let it sit there and gather interest until I need it.

ZestClaire

Hi ah23.

Alter ego is right - you'd only receive £7.50 per month with £3k in the Tesco account I'm afraid.

Don't forget, you can use the Tesco Account to set up Standing Orders from to satisfy the minimum pay in requirements for one of the other higher paying accounts. You can then send it back to the Tesco A/C via SO the next day.

Eg: Open a Tesco Account with £2,500 (3% interest) and open a Nationwide Account FlexiDirect A/C with £2,500 (5% interest). Set up a standing order for £1,000 from Tesco to the Nationwide A/C on 1st of the month to satisfy the pay-in requirement. Then have a standing order from Nationwide to Tesco for £1000 on the 2nd of the month.

You could max your interest out even more if you wanted to open the Nationwide Regular saver account as well. I think you can pay up to in £250 per month into that and it's 5% interest for the year. You could then set the standing order back to Tesco to £800 and pay the £200 in to the regular saver.

Have a read of the 5% savings loophole in the Savings section (sorry new so can't post link!)

Hope that helps?

HappyMJ

ah23 wrote: »

I thought so, thanks.



Thanks for this. I'm actually looking for an account with no monthly pay-in. I just want to treat it as a savings account, just to let it sit there and gather interest until I need it.

The monthly funding requirement is very easy to meet.

Set up a standing order to send the money to your current account and set up a standing order on your current account to send the money back to the account paying a high rate of interest.

LXdaddy

ZestClaire wrote: »

Eg: Open a Tesco Account with £2,500 (3% interest) and open a Nationwide Account FlexiDirect A/C with £2,500 (5% interest). Set up a standing order for £1,000 from Tesco to the Nationwide A/C on 1st of the month to satisfy the pay-in requirement. Then have a standing order from Nationwide to Tesco for £1000 on the 2nd of the month.


Have a read of the 5% savings loophole in the Savings section (sorry new so can't post link!)

Hope that helps?

My personal preference is to set up the standing orders mid month rather than the 1st or 22d - just to stay clear of any difficulties if the dates fall on a bank holiday or weekend.


Here's the 5% savings loophole thread https://forums.moneysavingexpert.com/discussion/5005862

Eco_Miser

Principle is sound, amounts are wrong.

ZestClaire wrote: »

You could max your interest out even more if you wanted to open the Nationwide Regular saver account as well. I think you can pay up to in [STRIKE]£250[/STRIKE] £500 per month into that and it's 5% interest for the year. You could then set the standing order back to Tesco to [STRIKE]£800[/STRIKE][STRIKE]£750 [/STRIKE] £500 and pay the [STRIKE]£200[/STRIKE][STRIKE]£250 [/STRIKE] £500 in to the regular saver.

All the accounts paying 3% or better are listed here. Many of the current accounts have matching regular savers, letting you save much more at the same rate with the same organisation.

Dan83

You could put £2000 in TSB @ 5%, £2500 in nationwide @ 5% and £500 in tesco @ 3%.

You would also need to meet the min pay in each month in TSB and nationwide, which is easy to do with a few standing orders each month

ah23

ZestClaire wrote: »

Hi ah23.

Alter ego is right - you'd only receive £7.50 per month with £3k in the Tesco account I'm afraid.

Don't forget, you can use the Tesco Account to set up Standing Orders from to satisfy the minimum pay in requirements for one of the other higher paying accounts. You can then send it back to the Tesco A/C via SO the next day.

Eg: Open a Tesco Account with £2,500 (3% interest) and open a Nationwide Account FlexiDirect A/C with £2,500 (5% interest). Set up a standing order for £1,000 from Tesco to the Nationwide A/C on 1st of the month to satisfy the pay-in requirement. Then have a standing order from Nationwide to Tesco for £1000 on the 2nd of the month.

You could max your interest out even more if you wanted to open the Nationwide Regular saver account as well. I think you can pay up to in £250 per month into that and it's 5% interest for the year. You could then set the standing order back to Tesco to £800 and pay the £200 in to the regular saver.

Have a read of the 5% savings loophole in the Savings section (sorry new so can't post link!)

Hope that helps?

HappyMJ wrote: »

The monthly funding requirement is very easy to meet.

Set up a standing order to send the money to your current account and set up a standing order on your current account to send the money back to the account paying a high rate of interest.

Dan83 wrote: »

You could put £2000 in TSB @ 5%, £2500 in nationwide @ 5% and £500 in tesco @ 3%.

You would also need to meet the min pay in each month in TSB and nationwide, which is easy to do with a few standing orders each month

Thank you all for your help & advice! Really appreciated!