Current act with better interest than savings act

ValiantSon

tombon92 wrote: »

Yes I was told about theflexclusive regular saver but I thought that with the lump sum I have on the 1% it would be the better option. I could be wrong though about that.

With the regular saver you will earn 5% on the balance in the account at any given time. As you are limited to depositing a maximum of £250 each month this means that the effective rate of interest on the money over the whole year is 2.69%. Obviously 2.69% is considerably better than 1%, so move £250 every month into the regular saver. At the end of the year you can open another regular saver to start the process again.

As others have said, the 1% you are being paid in the savings account is not as good as you can get elsewhere. Have a look at the links posted by xylophone.

Eco_Miser

tombon92 wrote: »

Yes I was told about theflexclusive regular saver but I thought that with the lump sum I have on the 1% it would be the better option. I could be wrong though about that.

Have both. Move £250 each month from the 1% account to the 5% account.

While you're at it, take a look at https://forums.moneysavingexpert.com/discussion/5776240 and consider funding all the accounts listed there that you qualify for.
And look at the quick links at the top of the page for savings, and consider using some more current accounts, and savings accounts paying more than 1%.
The idea is to earn the highest interest you reasonably can. This means having relatively small amounts (a few thousand) in quite a lot of different accounts.
There are loads of threads on here about this, going back decades, although the older ones will be out of date regarding the rates an amounts they are paid on.

aj23_2

I've had the Nationwide Flexdirect, and I only kept it for 12 months because I knew it would drop to 1% from thereafter.

I got about £10.50 a month, and had an average of £3,500 in the account (so I was always above the limit and always got the max interest).

If you've got £40,000 to deposit, you will still only get 5% on the first £2,500, and nothing above.

I'd recommend an easy access, ISA or make use of multiple regular savers instead.

tombon92

xylophone wrote: »

The LISA looks ideal for me. Thanks for this link.

Eco_Miser

ValiantSon wrote: »

As you are limited to depositing a maximum of £250 each month this means that the effective rate of interest on the money over the whole year is 2.69%.

2.69% of what?
It's an annual rate of 5% of the money in the account, the money not in the account is earning interest at whatever rate it's getting (1% in this case, in other cases it may not even be the depositors money at this stage.)

badger09

aj23 wrote: »

I've had the Nationwide Flexdirect, and I only kept it for 12 months because I knew it would drop to 1% from thereafter.

I got about £10.50 a month, and had an average of £3,500 in the account (so I was always above the limit and always got the max interest).

If you've got £40,000 to deposit, you will still only get 5% on the first £2,500, and nothing above.

I'd recommend an easy access, ISA or make use of multiple regular savers instead.

You made that recommendation on another thread and I asked you to explain why?

https://forums.moneysavingexpert.com/discussion/5800903

You didn't respond.

Please tell us why you are recommending easy access cash ISAs (other than HTB/LISA if appropriate).

ValiantSon

Eco_Miser wrote: »

2.69% of what?
It's an annual rate of 5% of the money in the account, the money not in the account is earning interest at whatever rate it's getting (1% in this case, in other cases it may not even be the depositors money at this stage.)

The effective rate on one years' deposits is 2.69% because the deposit amount is limited each month. Therefore, if you deposit the maximum of £250 each month you will earn a total of £80.64 in interest. Your total capital deposit is £3,000. £80.64 is 2.69% on £3,000. As the OP has a lump sum of money I have posted a rate which allows them to make a direct comparison with what that lump sum would earn in an easy access account.

I thought it was pretty self-explanatory, personally.

ValiantSon

aj23 wrote: »

I've had the Nationwide Flexdirect, and I only kept it for 12 months because I knew it would drop to 1% from thereafter.

I got about £10.50 a month, and had an average of £3,500 in the account (so I was always above the limit and always got the max interest).

If you've got £40,000 to deposit, you will still only get 5% on the first £2,500, and nothing above.

I'd recommend an easy access, ISA or make use of multiple regular savers instead.

Cash ISA rates are lower than those available in non-ISA acounts. On £40,000 the OP is not going to end up exceeding the £1,000 savings tax allowance, so there is no benefit in putting the money into an ISA. Doing so will mean a poorer return on their money.

aj23_2

ValiantSon wrote: »

Cash ISA rates are lower than those available in non-ISA acounts. On £40,000 the OP is not going to end up exceeding the £1,000 savings tax allowance, so there is no benefit in putting the money into an ISA. Doing so will mean a poorer return on their money.

Oh it's my stalker... again.

The OP would get £242 after 12 months if he put £20k in Leeds Online Access ISA at 1.21%. He'd have to open three of the top paying regular savers (and have the current accounts linked to them, and all the direct debit/pay-in requirements that come with them) in order to get about the same. But as I said, I suggested other options too. So why you felt the need to reply and essentially contribute nothing we don't already know....

tombon92

ValiantSon wrote: »

Cash ISA rates are lower than those available in non-ISA acounts. On £40,000 the OP is not going to end up exceeding the £1,000 savings tax allowance, so there is no benefit in putting the money into an ISA. Doing so will mean a poorer return on their money.

What about a first time buyer LISA if I'm looking to buy a house within a few years? I could put 4k away a year from my savings.