Is this possible?

WibblyGirly

I'd like to take advantage of the 5% interest on the Nationwide current account. It requires me to pay in £1000 a month minimum. I'm a student, I don't work at the minute but I do have plenty of savings to live off until I get a job (hopefully June!) :T

Can I, in theory, transfer £1000 (or however much up to £2500) from an account from another bank to that one, leave it a few days to get the interest, then transfer it back out? Do I have to use the account as an actual one? Not just for the interest? Can I send money between multiple accounts like this to get interest or will it look dodgy when I come to apply for a mortgage?

I'm going in anyway to ask as I want to try get their student account which has a bigger overdraft than mine which I can then add to my LISA before end of tax year.

Thanks!

binaryuniverse

In a word, yes.

However, it's not fully clear how you are going to use this account. Do you mean you intend to leave £2500 in there for the full 12 months, and transfer in an extra £1000, and transfer that out again? That's the best way to maximise this offer.

Or do you mean you'd pay in up to £2500 per month, leave it in for a few days, then transfer that out? In which case you'll get barely any interest.

I've got a NW account with £2500 in it. Not used the debit card at all, or have any direct debits. Simply pay in £1000 per month and move that on. Had no problems.

WibblyGirly

I was going to transfer back out after a few days, does the £2500 have to be in there the full month to gain the £125 interest? The student account I use at the minute offers 1% interest so I wanted something better. Even 5% interest on £1000 is better than 1%. My current savings accounts are 0.25% so I can actually afford to empty them and leave some in the nationwide one while moving £1000 around.

I don't intend to use the account to buy things or pay bills from.

Edit- I've just twigged your last sentence about leaving £2500 in there! I think that will be a good short term plan for me whilst I have the £2500 to do so. Hopefully once I get a job I can build up the money back to £2500 in that account and keep it there for the rest of the 12 months.

Thank you!

TheShape

WibblyGirly wrote: »

I was going to transfer back out after a few days, does the £2500 have to be in there the full month to gain the £125 interest?

It will have to be in there for the full year to earn £125 interest.

You earn interest daily on the amount of money in the account so to earn the maximum amount of interest you need to keep £2500 in the account for the full year. Every day that you have less than £2500 in the account will reduce the interest you receive.

WibblyGirly

TheShape wrote: »

It will have to be in there for the full year to earn £125 interest.

You earn interest daily on the amount of money in the account so to earn the maximum amount of interest you need to keep £2500 in the account for the full year. Every day that you have less than £2500 in the account will reduce the interest you receive.

wow I completely misunderstood it then! I thought it was monthly interest so would pay out £125 each month :rotfl: I'm a novice at this, I wish I had been more savvy when I was working but now is better than never!

Thank you for clearing that up for me! I might wait until I'm working then before opening it an leaving £2500 in there as chances are I'll need some of it before June.

ceredigion

WibblyGirly wrote: »

wow I completely misunderstood it then! I thought it was monthly interest so would pay out £125 each month :rotfl: I'm a novice at this, I wish I had been more savvy when I was working but now is better than never!

Thank you for clearing that up for me! I might wait until I'm working then before opening it an leaving £2500 in there as chances are I'll need some of it before June.

Your not the first and wont be the last. expect some comments regarding the caliber of our university students though.

agrinnall

A better option for an account to transfer something in and out of is something like the Halifax Reward account that pays £3 per month as long as you pay in £750 a month and have 2 DDs on the account. The £750 only has to pass through the account, I transfer mine out within minutes of it going in, although obviously you need to ensure there is enough to pay the DDs each month. You can also get £75 for switching to it so set up a donor account elsewhere first.

WibblyGirly

ceredigion wrote: »

Your not the first and wont be the last. expect some comments regarding the caliber of our university students though.

Even worse, I'm doing a Masters! :eek: I think they should teach some banking basics in school though. The way it was phrased on the website made it seem like interest was paid monthly and it stayed at 5% for a year. I know better now! I did think it seemed a bit too good to be true! :rotfl:

YorkshireBoy

WibblyGirly wrote: »

I think they should teach some banking basics in school though.

Don't you watch the news or current affairs programmes? Read the papers? The base rate is 0.5%. It's been at an historic low for a decade or so, and 0.25% for the bulk of it. Mortgage rates can be had for between 1% and 2% interest.

And you thought Nationwide were going to give you a 60% return on your cash?...30 times the rate they're charging their mortgage customers, and 20 times the rate they're charging their loan customers...seriously? That's quite scary really!

tempus_fugit

WibblyGirly wrote: »

Even worse, I'm doing a Masters! :eek: I think they should teach some banking basics in school though. The way it was phrased on the website made it seem like interest was paid monthly and it stayed at 5% for a year. I know better now! I did think it seemed a bit too good to be true! :rotfl:

On the website is says the rate is 4.89% p.a. (per annum). That seems quite clear to me, although I admit that the use of Latin might confuse some.

Kim_13

WibblyGirly wrote: »

Even worse, I'm doing a Masters! :eek: I think they should teach some banking basics in school though. The way it was phrased on the website made it seem like interest was paid monthly and it stayed at 5% for a year. I know better now! I did think it seemed a bit too good to be true! :rotfl:

Interest is paid monthly. It works out at just over £10 per month. Sadly it's 5% for the year though, not per month.

As you may need some of the money before June, you might consider opening a FlexAccount with Nationwide instead. This can be used (via switching to Nationwide through the switch service, or paying in £750 per month for 3 calendar months) to qualify for the Flexclusive Regular Saver which also pays 5%. You can only pay in £250 per month in this case but it is instant access so you're free to withdraw the money when you need. This allows you to save your FlexDirect (it is now being restricted to one 5% per person) for when you have £2,500 that you can leave in for the full year.

If you have the saver via a FlexAccount you need to continue the £750 per month transfers, as it's an ongoing requirement to hold the account and switching to them only gets this waived for 4 months.

If you have a FlexStudent account with them you automatically qualify for the Flexclusive Regular Saver without any switching or minimum account pay in required.

If you hold a current account with Nationwide, it's an easy job to upgrade it to FlexDirect online when you're ready - though remember to up the monthly funding to £1,000 for the FlexDirect interest when the time comes.

A FlexDirect is useful to keep when it reduces to 1% as it means you don't need to fund it monthly to open and keep a saver. There is no rule against opening a new 5% saver when one runs out. Though you'd need to continue the monthly £1,000 pay ins if you wanted to get 1% interest on up to £2,500 in the FlexDirect.

Sorry for the long post - feel free to ask if you need anything clarified further.