Where would you save next?

clarence100

I’m saving towards a house deposit (but won’t be ready to move until sometime late 2018, early 2019) and looking for suggestions on where to save £4,500 that has built up in a current account (but earns no interest).

I’ve got quite a few accounts (see below) and not sure where to go next. I was thinking of going for Santander 123 (would make approx. £100 a year using their calculator), but not sure whether opening a 6th Current Account was slightly overkill (and has negative impact on credit rating?). I’m not looking to switch any of my existing current accounts (unless there is a good reason to). The interest rates on easy access savings seem poor and so was also considering topping up Premium Bonds. I already have an ISA. I’m a higher rate tax payer, but don’t hit £500 allowance yet (although probably will next year).

Any suggestions would be very welcome!

5 x Current Accounts
Firstdirect (no interest, but gives access to Regular Saver)
HSBC Advance (no interest, but gives access to Regular Saver)
Halifax Reward (I get £3 'reward' each month)
Nationwide FlexDirect (I get 5% interest on £2500)
TSB (I get 3% interest on £1500)

3 x Regular Savers:
Firstdirect (I put in £300 per month @5%)
HSBC (£250 per month @5%)
Nationwide (£500 per month @5%)

1 x Help to Buy ISA:
Halifax (I put in £200 per month @3.5% - balance is now just over £5,000)

Premium Bonds: £4,150

So at the moment I''m putting £1250 into Regular Saver/ISAs. Can afford to do more (maybe about £750 extra a month) - this is partly why the £4500 has built up.

I still have about £8,000 student loan debt (with interest rate of 1.25%). This is due to be paid off by December 2018 with my payroll contributions. I'm under the impression that there is little to be gained by paying this off sooner because it would reduce my house deposit savings.

I have no credit card debt - I use Amex for cashback and Post Office for overseas. Each is paid off in full each month.

greenglide

No LISA yet?

Since that will give you 25% on all money put in (you can disregard the interest really) surely this is a no brainer for anyone who is "definitely" planning a house purchase in 2018/2019?

It would need to be in cash so Skipton is your only current option and you can move your HTB before April 2018.

clarence100

Thanks for your reply.

I had considered the LISA option, but I think there is a very high chance that when we buy a house, it will be over the £450,000 limit (I am in London and it will be a joint purchase with my partner who already owns a flat). If I don't get the 25% bonus from either the LISA or HTB ISA (because of being over the limit), my thinking was that the HTB ISA is better for the moment.

If I switched the HTB to LISA now and then withdrew to put towards a house over 450k in 2018/19, would there be a penalty? If so, I think im better sticking with HTB ISA now (just for the 3.5% interest)

Please correct me if I've misunderstood this! I find the HTB/LISA slightly confusing.

greenglide

Hmm - I had assumed that as you had a HTB that you intended meeting the price limits. If you were to purchase a property with that sort of price then with a LISA you would either face the penalty for withdrawing the money without meeting the rules or waiting until you are 60.

At least the HTB pays a market leasing rate of interest and doesn't penalise you if you withdraw the money.

Dazed_and_confused

I’m a higher rate tax payer, but don’t hit £500 allowance yet (although probably will next year).

There is no "allowance", all savings interest which was previously taxable remains taxable it's just that some may now be taxed at 0%.

As a higher rate taxpayer that could mean the £500 interest you understand to be tax free could cause you to pay more tax elsewhere. This particularly affects those earning over £100k and anyone who could be subject to the High Income Child Benefit Charge.

darkidoe

I would do a switch to Marks and Spencer Bank to gain 5% regular saver and a switching bonus.

Also consider Tesco bank for 3% current accounts.

ricky_v

Bank of Scotland and club lloyds - 19k at 2%

Club lloyds ref saver £400/month at 3%

Although if you're going to hit the £500 limit then it might be worth looking at cash ISAs