Piggybanking - which accounts to keep? Santander123 or standard C/Account?

ChasingtheWelshdream

Hi,

We want to start piggy banking, so I'm looking at which accounts would be best. Martin's article mentions 'no frills' accounts, so I wonder if I should change our existing ones.

Background information: I have two Santander123 accounts with DDs spread between them. These were originally opened to maximise interest when re-mortgaging for building work a couple of years ago. They are both now sub £3k. I want to lose one as there is now no interest incentive and a £5 monthly fee. In fact, is it worth having one at all now? We receive approx £8 per month, so only £3 net.

I also have a Halifax standard current account and a Halifax savings account - both rarely used with minimal balances.

So, which account would you use for which? I'm trying to decide if it is worth keeping the 123 account, converting to a 123 Lite, or convert to a basic account.

Our household income is erratic due to self-employment and 0 hours contracts. My salary vary as much as £250-£800 per month, but current Child Tax Credits and Child Benefit give a regular £700ish per month. Having not been in this situation before, I'm unsure if it counts against us if we wanted to open new accounts. Hence I assume it is easier to keep what we have.

We are mortgage free and have no debts.

Up until now, everything has been lumped together and I haven't opened an account in years! :rotfl:

Any thoughts?

YorkshireBoy

paulandjanine wrote: »

I'm trying to decide if it is worth keeping the 123 account, converting to a 123 Lite, or convert to a basic account.

Well in that order:

The 123 makes you £36 per year.
The Lite makes you £234 per year (including interest on the £3K you kept in the 123 once you're making 5% on it instead).
A 'basic' account makes £0 per year (granted, you'd have the £150 interest detailed above).

So what do you think, out of those 3 options?

Our household income is erratic due to self-employment and 0 hours contracts.

...but your bills (and therefore cashback) are constant!

ChasingtheWelshdream

YorkshireBoy wrote: »

Well in that order:

The 123 makes you £36 per year.
The Lite makes you £234 per year (including interest on the £3K you kept in the 123 once you're making 5% on it instead).
A 'basic' account makes £0 per year (granted, you'd have the £150 interest detailed above).

So what do you think, out of those 3 options?...but your bills (and therefore cashback) are constant!

I hadn't looked at it that way - thanks! But I'm being dense and can't see how you got those figures?:o

Do you mean keep £3k in the 123 (with a couple of DDs to ensure cashback), and use a 123Lite for the rest of the bills?

Sorry if I'm sounding silly. I can't see how to make 5% on the 123? I've just put in our two highest DDs plus a £3k balance and calculates £14.58 per year.

I've added the rest of the DDs into the Lite and it shows £44.62 per year. (which in itself is good - I hadn't realised it paid that.)

YorkshireBoy

Convert the 123 to Lite.
Put your £3K in an account that pays 5%, ie Nationwide.


I hadn't realised your £8 per month return included interest, so ignore my comments on that above.


So at the moment you pay £5 to make £8. The £8 is broken down into interest of £xx and cashback of £xx (you put your figures in).


By switching to Lite you'll pay £1 to make £xx (you put the figure in).


Putting £3K in Nationwide will make £150 a year (for the next 2 years, as there are 2 of you, using current accounts and regular savers).

ChasingtheWelshdream

YorkshireBoy wrote: »

Convert the 123 to Lite.
Put your £3K in an account that pays 5%, ie Nationwide.


I hadn't realised your £8 per month return included interest, so ignore my comments on that above.


So at the moment you pay £5 to make £8. The £8 is broken down into interest of £xx and cashback of £xx (you put your figures in).


By switching to Lite you'll pay £1 to make £xx (you put the figure in).


Putting £3K in Nationwide will make £150 a year (for the next 2 years, as there are 2 of you, using current accounts and regular savers).

Thank you, that makes a lot of sense to my befuddled mind!

surreysaver

Don't forget with the Santander accounts you need to pay in a minimum of £500 per month from a non-Santander account.

Or rather, an account as long as its not Santander and not in your name

ChasingtheWelshdream

surreysaver wrote: »

Don't forget with the Santander accounts you need to pay in a minimum of £500 per month from a non-Santander account.

Or rather, an account as long as its not Santander and not in your name

surreysaver wrote: »

Don't forget with the Santander accounts you need to pay in a minimum of £500 per month from a non-Santander account.

Or rather, an account as long as its not Santander and not in your name

Our income is paid into one, and I currently use my Halifax current account purely for transferring out/in via standing order each month. I'll think I can carry this on with what I have planned... :money:

YorkshireBoy wrote: »

Convert the 123 to Lite.
Put your £3K in an account that pays 5%, ie Nationwide.

I have just successfully applied for a Nationwide Flex account, :j I will get this sorted one step at a time! :-D

So we've had a chat and agreed the following:

123 Lite purely for DDs, which should effectively operate at a nil balance by month end, but should net us £40ish per year. More once I streamline all DDs.

Nationwide Flex to pay our income into and household expenditure, earning 5%. We'll have virtual money pots via a spreadsheet to maximise the credit balance. This will include food, petrol and annual bills.

We have a cashback credit card, so will stooze (?) by using that instead of a debit card, to be cleared each month. We will ONLY spend if allowed for in the virtual money pots, and update the spreadsheet daily. (We usually spend on this anyway but have been far too lax....:eek:)

A Nationwide Savings account for everything else, again with money pots earning 5%.

Does that sound doable? Because of our variable income we would struggle to meet the criteria for multiple high interest current accounts.

YorkshireBoy

By "Flex" I assume you mean FlexDirect, and by "Nationwide Savings account" I assume you mean "Flexclusive regular saver"?


I'm not into piggy-banking (pots for this and pots for that seems to overcomplicate things for me), but the above will maximise your return.

ChasingtheWelshdream

YorkshireBoy wrote: »

By "Flex" I assume you mean FlexDirect, and by "Nationwide Savings account" I assume you mean "Flexclusive regular saver"?


I'm not into piggy-banking (pots for this and pots for that seems to overcomplicate things for me), but the above will maximise your return.

I do indeed, it certainly seemed the best one for interest without having to include DDs.

I always thought it sounded complicated, but we really need to get a handle on what we're spending to allow for larger bills/unexpected. Just looking at the balance has led us into a false sense of security.

We have been fortunate over the last few years that money wasn't really an issue. Now circumstances have changed and we need to know we can afford say £500 when car insurance is due.

I'm willing to give it a go and see how we get on. At least now I won't be spending £10 per month bank fees for no good reason