Where To Save Money? Advice Please

JeffBrinks

Hi All,

After a recent check of my 3 savings accounts with my current bank (including 1 ISA) they are all displaying as 0.20% interest.

I'm now looking at making a switch.

I'm currently a basic rate tax payer.
I have approximately 17k of savings (10k of which is in my ISA).

I am paying off a 5k loan, but interest is minimal at only a few percent which is why I'm not paying it off in one go.

Can anyone advise the best place to put the money? I've been looking at a First Direct account that pays 5% interest if I save up to £300 a month, but I'm unsure if I would get taxed on that.

I would be able to save between £400-£500 a month.
I would like to keep my ISA. But I would also like decent interest rate returns.

At the moment, I am not interested in going down the stocks and shares route.

I'm also happy to open a new account and keep the money across separate accounts if needed.

Any advice is really appreciated.

Look forward to hearing from this amazing community!

MallyGirl

A quick look at the top of this page would show you:

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest?_ga=2.115039172.2131946880.1514306170-678509072.1312368231

You can get 5% on some regular savers and bank accounts if you are prepared to move money about a bit

JeffBrinks

Thank you. I've done a lot of reading but struggling to work out whether it's best to split the money, or dump my Cash ISA and take out two current accounts, getting the higher interest.

Just interested in knowing other people's opinions on how to manage it, rather than starting to save again from scratch.

xylophone

but interest is minimal at only a few percent

What is "few"?

jimjames

Few percent Vs 0.2% means it's still better to have paid off loan over last few years

Kim_13

Have a look at the MSE fountain, which suggests where money should be saved first for the best returns: https://www.moneysavingexpert.com/savings/which-saving-account

Provided you have a decent amount of cash for emergencies (3-6 months expenses is advised) I would consider paying more off of the loan if you can't at least match the loan's interest rate where you would otherwise be keeping the money.

colsten

JeffBrinks wrote: »

I'm currently a basic rate tax payer.
I have approximately 17k of savings (10k of which is in my ISA).

I am paying off a 5k loan, but interest is minimal at only a few percent which is why I'm not paying it off in one go.

Can anyone advise the best place to put the money? I've been looking at a First Direct account that pays 5% interest if I save up to £300 a month, but I'm unsure if I would get taxed on that.

As a BR tax payer, you get up to £1,000 interest tax free each financial year. With current interest rates and limits on how much you can put into the well paying accounts, you are not likely to get anywhere near £1,000 a year. ISAs are likely to only make sense for savings above £20k, as if push comes to shove and the ISA limit gets reduced, you can deposit £20K into an ISA in an instant. Although a lot depends on your plans for the money - it might make sense to put some of your savings into a LISA.

JeffBrinks wrote: »

I am paying off a 5k loan, but interest is minimal at only a few percent which is why I'm not paying it off in one go.

Are you sure your loan costs you less than you can get in savings interest? From the figures you mentioned, it doesn't appear to be the case.

phillw

JeffBrinks wrote: »

Can anyone advise the best place to put the money?

My guess is that paying off the loan in full would be a good start.

Regular savers are ok for new savings, not so good for lump sums. £2500 @ 5% in the first year of a flex direct is pretty good. TSB & Tesco offer 3% on a few thousand. I personally don't see any advantage in having any kind of ISA if you have debts or a mortgage. Cash ISAs perform really badly, a good managed S&S ISA will outperform it.