Best place to keep £5k emergency fund

Persephone_Mulberry

I have £5k to put into an emergency fund but don't know the best place to keep it.

I want it in a separate place from our bills and spending accounts, so the accounts with good interest but a minimum payment don't seem to fit the bill?

Can anyone make any suggestions?

AlanP_2

Persephone_Mulberry wrote: »

I have £5k to put into an emergency fund but don't know the best place to keep it.

I want it in a separate place from our bills and spending accounts, so the accounts with good interest but a minimum payment don't seem to fit the bill?

Can anyone make any suggestions?

Options include Tesco Current AC's at 3% on £3k, no DD or pay in criteria. Could open one each.

Or 2 * Nationwide Flexclusive ACs @ 5% on £2.5K for first 12 months (then drops to peanuts so need to rethink). Have to pay £1k per month into each but easy to do by cycling your £5k around each month like this:

SO from NW-1 to Main AC for £1k (Day 1)

SO from Main AC to NW-2 for £1k (Day 1)

SO from NW-2 to Main AC for £1k (Day 10)

SO from Main AC to NW-1 for £1k (Day 10)

then repeat each month - remembering to withdraw the monthly interest and park it somewhere else as anything over £2.5k does not earn interest.

For the interest open a Tesco account alongside and use that in place of "Main AC" above.

darkidoe

2x Tesco Current Accounts. £3000k Each at 3% interest. No Minimum Pay-in required.

jimjames

Persephone_Mulberry wrote: »

I have £5k to put into an emergency fund but don't know the best place to keep it.

I want it in a separate place from our bills and spending accounts, so the accounts with good interest but a minimum payment don't seem to fit the bill?

If you have £5k why don't the accounts with minimum payment fit the bill? You have more than £1k so it's no problem to pay £1k out and move it back in again

xylophone

As this is emergency money you might prefer joint accounts.

For one year you might consider opening a joint Nationwide Flex direct account - 5% on £2500.

You could also open a Tesco joint current account. (3% on up to £3000).

Move £1000 from Tesco to Nationwide once a month and back again with the NW interest.

After a year move the money in NW to a second Tesco current account and close the Flexdirect.

Persephone_Mulberry

This is all v new to me. Does just moving money in via so rather than it being a pay cheque count?

jimjames

Persephone_Mulberry wrote: »

This is all v new to me. Does just moving money in via so rather than it being a pay cheque count?

How does the bank know? What do their T&Cs say? If it just says that you need to pay in £1000 per month then that's all you need to do to comply.

mt99

Depends on what you define as an emergency. For some emergencies, cash might be the best answer (eg banking system problems). For REAL emergencies you might be better off with bars of chocolate and tins of baked beans.

Eco_Miser

AlanP wrote: »

Or 2 * Nationwide Flexclusive ACs @ 5% on £2.5K for first 12 months (then drops to peanuts so need to rethink). Have to pay £1k per month into each but easy to do by cycling your £5k around each month like this:

SO from NW-1 to Main AC for £1k (Day 1) NW-1 now holds £1.5k

SO from Main AC to NW-2 for £1k (Day 1)NW-2 now holds £3.5k, but earns interest on only £2.5k

SO from NW-2 to Main AC for £1k (Day 10) NW-2 now holds £2.5k

SO from Main AC to NW-1 for £1k (Day 10) NW-1 now holds £2.5k

So for 10 days a month you only earn interest on £4k. Much better to do all the movements on the same day. Also, you don't need to move the £1k all at once,although there's no reason not to in this case.

DiggerUK

Stop farting about. Get some gorm. Have some fun.
Buy Premium Bonds..._

Persephone_Mulberry

I need an emergency fund first