Best Savings Account (Beginner)

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I'm after some advice regarding a savings account I would like to open. I am not too familiar with savings accounts so try to explain things as simple as possible.

Ok, so a bit of background..

Age: Mid 20's
Salary: £16,000 Per Year
Saving Target: £130 Per Month

The account would be for personal savings, just to save as much as possible for A. security, and B. to treat myself to something nice in the future (without spending it all). The account must be one where I can access/withdraw at any time.

So I see there is many types of savings account, ones where you have to pay a fee, pay interest, interest free and so on. Obviously it makes no difference to me, as long as by the end of the year, I am making the most amount of profit possible, in other words, the positives would have to outweigh the negatives.

Any advice?
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  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    Start by opening a TSB Classic Plus Current account. Up to £2k at 5%

    You have to pay in £500 a month, but that can come out again.

    So each month pay in £630 by standing order from your everyday bank account, then a day later same again, SO sending £500 back to your everyday account.
  • Ashen
    Ashen Posts: 592 Forumite
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    If you don't want to set up standing orders back and forth (which isn't difficult), then the best option I'd say is a Tesco current account which gives 3% interest on balances up to £3000.

    But if you are fine with that, the best option is, as above, a TSB Classic Plus account.
  • YKay
    YKay Posts: 751 Forumite
    edited 22 May 2016 at 11:18PM
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    AnotherJoe wrote: »
    Start by opening a TSB Classic Plus Current account. Up to £2k at 5%

    You have to pay in £500 a month, but that can come out again.

    So each month pay in £630 by standing order from your everyday bank account, then a day later same again, SO sending £500 back to your everyday account.

    Would I not be able to pay in £500, then send £370 back? Therefore qualifying for the £500 standing order, but keeping £130 savings in the account.

    Anyway....

    £130 x 12 months = £1,560

    Would I be right to say, if I get 5% interest from my £1,560, I would get £78 over the whole year interest? Natwest I would profit £160.79 per year?
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    edited 22 May 2016 at 10:54PM
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    YKay wrote: »
    Would I not be able to pay in £500, then send £370 back? Therefore qualifying for the £500 standing order, but keeping £130 savings in the account.

    Anyway....

    £130 x 12 months = £1,560

    Would I be right to say, if I get 5% interest from my £1,560, I would get £78 over the whole year interest?

    You can do as you suggest in your first paragraph.

    Your second point isn't right as you'll only have just over half that money in the account for the year, otherwise you'd be earning interest on money you haven't saved. So your actual interest on that amount saved would be about £40 depending on the actual date you credited the money.

    Edit - the tsb account could actually be improved by using their debit card for contactless payments, 5% on up to £100 a month until the end of the year.
  • YKay
    YKay Posts: 751 Forumite
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    bigadaj wrote: »
    You can do as you suggest in your first paragraph.

    Your second point isn't right as you'll only have just over half that money in the account for the year, otherwise you'd be earning interest on money you haven't saved. So your actual interest on that amount saved would be about £40 depending on the actual date you credited the money.

    Edit - the tsb account could actually be improved by using their debit card for contactless payments, 5% on up to £100 a month until the end of the year.

    £130 per month I would be putting away in the account (to keep), which would give me £6.50 p/m interest. £6.50 x 12 = £78 ?
  • YKay
    YKay Posts: 751 Forumite
    edited 22 May 2016 at 11:20PM
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    On the other hand, I was talking to natwest yesterday and they advised me that if I put £130 away in the Savings Builder account per month, instead of my having saved £1560 by the end of the year, the interest I receive will boost my savings up to £1,720.79. See bellow for the working out they provided:

    Natwest Savings Builder

    Balance / Interest / Balance after Interest

    £130.00 / £1.95 / £131.95

    £261.95 / £3.93 / £265.88

    £395.88 / £5.94 / £401.82

    £531.82 / £7.98 / £539.79

    £669.79 / £10.05 / £679.84

    £809.84 / £12.15 / £821.99

    £951.99 / £14.28 / £966.27

    £1,096.27 / £16.44 / £1,112.71

    £1,242.71 / £18.64 / £1,261.35

    £1,391.35 / £20.87 / £1,412.22

    £1,542.22 / £23.13 / £1,565.36

    £1,695.36 / £25.43 / £1,720.79

    Again, i'm no expert.. correct me if there is catches here but it seems more profitable than then TSB as mentioned above only profiting me £78 per year? Natwest I would profit £160.79 per year?
  • YorkshireBoy
    YorkshireBoy Posts: 31,541 Forumite
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    YKay wrote: »
    £130 per month I would be putting away in the account (to keep), which would give me £6.50 p/m interest. £6.50 x 12 = £78 ?
    £130 in month one would generate (very roughly, because it looks like you don't do maths ;))...


    £130 x 5% / 12 = £0.54
  • YKay
    YKay Posts: 751 Forumite
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    £130 in month one would generate (very roughly, because it looks like you don't do maths ;))...


    £130 x 5% / 12 = £0.54

    There goes my first error :D. So would you still recommend TSB over Natwest as I mentioned above?
  • YorkshireBoy
    YorkshireBoy Posts: 31,541 Forumite
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    YKay wrote: »
    There goes my first error :D. So would you still recommend TSB over Natwest as I mentioned above?
    One pays 5% AER. The other pays 1.5% AER and has conditions attached. Does that help you make your decision?
  • YKay
    YKay Posts: 751 Forumite
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    One pays 5% AER. The other pays 1.5% AER and has conditions attached. Does that help you make your decision?

    The obvious choice would be 5%, but from the plan natwest gave me, I would gain £160.79 in interest from them, and with TSB I would gain how much over the year?
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