Keep money in main bank account, or a savings account?

Pepperoni

I'm starting to put money away monthly for ad hoc things like holidays, car TAX / MOT / Service, etc. So whilst it's savings as it's building over a year, it's going to be spent so not really savings.

Would you keep the money in your main bank account or put it in a savings account alongside your actual savings?

I can't decide which method I think is better practice!

xylophone

Use a current account that will give you a decent rate of interest.

Katiehound

xylophone wrote: »

Use a current account that will give you a decent rate of interest.

either Tesco current a/c paying 3%-(on upto £3K) and no monthly funding required
or TSB Classic Plus paying 5% (on upto £2K) which needs £500pm pay in. Neither of these requires outgoing DDs

Additionally the TSB has a reward on using dsbit card contactless, so the chance to earn up to an extra £5 pm

Hardly any savings a/cs paying anything like these

colsten

A regular saver might be another alternative. E.g. the Nationwide or Club Lloyds one

Pepperoni

Thanks all. I have a Santender 123 so I'm already getting 3% on it (although I know this will change come November!). My question (worded badly, apologies) was more about whether I should keep it all my money in one account or if it is better practice to keep 'spending' money in one account, and 'savings' - including annual expenses such as car tax etc in the same or a different account.

badger09

Pepperoni wrote: »

Thanks all. I have a Santender 123 so I'm already getting 3% on it (although I know this will change come November!). My question (worded badly, apologies) was more about whether I should keep it all my money in one account or if it is better practice to keep 'spending' money in one account, and 'savings' - including annual expenses such as car tax etc in the same or a different account.

As you're fairly recently debt free:T, it depends how much you can trust yourself not to spend savings if they are are all kept in one account.

I would go for an account which will earn you some interest. It is always useful to have at least 2 separate current accounts anyway, for those occasions when one bank's systems are down etc

badger09

Also, unless you are making lots of cashback on your DDs with Santander, the 123 is almost certainly not the best for you now, let alone when the interest rate drops on 1 November:(

Pepperoni

Thanks Badger!

I'm not sure I trust myself not to spend the money put away for car tax etc! I use YNAB religiously and the budget columns for car tax etc always have something in at the beginning of the month but never do by the end!

I'm earning a fair bit of interest from Santender. I have a 0% credit card that ends next year, and all of the money (hence being debt free) is in the Santender account. I never ever touch this money though!

Brambleberry

Pepperoni wrote: »

My question (worded badly, apologies) was more about whether I should keep it all my money in one account or if it is better practice to keep 'spending' money in one account, and 'savings' - including annual expenses such as car tax etc in the same or a different account.

Hi Pepperoni, you are asking the right questions of yourself already, there is no single perfect answer to this, and as badger09 has pointed out, you need to be able to be accountable to yourself, so perhaps a separate account for annual expenses will help, or perhaps you can track how much you have put aside on paper or a spreadsheet if you want to keep it all in the one pot. The advice to have another account in a different bank is good, because glitches do happen and it saves hassle if you have a couple of options to hand.

While many people here (myself included) will be looking for accounts that will give you some interest, don't forget that the simple act of putting aside money for the big things in advance, (even in a 0% interest current account) will still save you a fair bit when compared to the interest you could pay if you settled for the monthly repayment options or using credit cards.

HTH,

Bb

takman

Pepperoni wrote: »

Thanks Badger!

I'm not sure I trust myself not to spend the money put away for car tax etc! I use YNAB religiously and the budget columns for car tax etc always have something in at the beginning of the month but never do by the end!

I'm earning a fair bit of interest from Santender. I have a 0% credit card that ends next year, and all of the money (hence being debt free) is in the Santender account. I never ever touch this money though!

If you owe money on a credit card you are still in debt, even if you have the money to pay it off. The definition of debt is a sum of money owed so you still owe the money.

I always find it amusing when people claim to be debt free yet in reality being debt free is a bad idea. Using credit cards and paying them off at each statement or stoozing is always a good thing to do. Paying by direct debit on utilities means you pay then after they have be used so it also a debt but is the best money saving way to do it.