Best Holding Account

eskbanker

Outsider_83 wrote: »

Is it possible to renew the Nationwide account for another 12 months at 5%?

No, as per https://www.nationwide.co.uk/products/current-accounts/flexdirect/rates-fees-overdrafts:

If you have previously held a FlexDirect account you will not be entitled to the introductory rate or offer under a new agreement and therefore you will receive the standard 1% gross p.a/ AER (variable) interest rate.

RG2015

Outsider_83 wrote: »

Is it possible to renew the Nationwide account for another 12 months at 5%?

If you have a partner you could open a joint Nationwide FlexDirect current account and qualify for another 12 months at 5%. This would also entitle you to open a second Nationwide regular saver at 5%.

I have chosen to keep my Nationwide FlexDirect current account which enabled me to open another 5% regular saver. All I keep here is £1 and transfer in £250 per month which then goes to the regular saver.

I already had two Santander 123 current accounts with 1.5% on up to £20,000 each and these are what I use for funding my several regular savers. Yes, I know the £5 fee negates some of the benefits but along with the 5% Santander regular savers the 123 current accounts suit my requirements best.

Outsider_83

No partner so it looks like Tesco is my only option but there are hoops to jump through.

Zanderman

Outsider_83 wrote: »

No partner so it looks like Tesco is my only option but there are hoops to jump through.

I'm not sure, as I said in my earlier response, that tesco is worth it as a holding account for feeding reg savers.

It only pays interest on up to 3k. But it is 3% interest. So to feed reg savers, you would be taking some of that 3k out of a 3% earning account to earn what exactly?

If to a reg saver at 5% (the best available) that sounds better. But is it? As the money will be in bite-sized chunks scattered over 12 months most of it will only earn a proportion of 5% (12/12 of 5% for the first payment, dwindling to 1/12 of 5% for the final payment. So the money, once moved, will only be earning an average over the year of about 2.6% - less than it would have earned if you kept it in tesco.

Of course there will be ongoing interest from tesco on the remaining balance as you draw it down to the reg saver. Which will add a bit. I haven't worked out how much, but perhaps you should as it seems a lot of effort to go to for minimal gain.

RG2015

Zanderman wrote: »

I'm not sure, as I said in my earlier response, that tesco is worth it as a holding account for feeding reg savers.

It only pays interest on up to 3k. But it is 3% interest. So to feed reg savers, you would be taking some of that 3k out of a 3% earning account to earn what exactly?

If to a reg saver at 5% (the best available) that sounds better. But is it? As the money will be in bite-sized chunks scattered over 12 months most of it will only earn a proportion of 5% (12/12 of 5% for the first payment, dwindling to 1/12 of 5% for the final payment. So the money, once moved, will only be earning an average over the year of about 2.6% - less than it would have earned if you kept it in tesco.

Of course there will be ongoing interest from tesco on the remaining balance as you draw it down to the reg saver. Which will add a bit. I haven't worked out how much, but perhaps you should as it seems a lot of effort to go to for minimal gain.

I agree and I keep £3,000 in my Tesco current account to get the full benefit if the 3%.

You can also use the MSE regular saver calculator to factor in the interest on the reducing balance account as well as the regular saver. This is on the link below towards the foot of the page.

https://www.moneysavingexpert.com/savings/best-regular-savings-accounts

Zanderman

RG2015 wrote: »

I agree and I keep £3,000 in my Tesco current account to get the full benefit if the 3%.

You can also use the MSE regular saver calculator to factor in the interest on the reducing balance account as well as the regular saver. This is on the link below towards the foot of the page.

https://www.moneysavingexpert.com/savings/best-regular-savings-accounts

Actually, having done that, and assuming it is correct, £3k in tesco current a/c feeing a 5% reg saver at, say, 250 pcm would earn, according to the calculator:

Total interest earned: £122
£41 from the normal savings [i.e Tesco ca] & £81 in the regular saver.
If you'd kept the money only in the normal savings account [i.e Tesco ca] you'd have earned £90 in interest.

So it might seem worthwhile despite my comments earlier as there seems to be a gain of £32.
The total £122 is, btw, roughly equiv to 4% interest overall.
But to get that there are all the hoops to meet the tesco account conditions...

teddysmum

The fact that a regular saver offering 5% does not pay 5% of the total amount is irrelevant to the decision of moving money at 3% in Tesco to 5% in Nationwide.


If the money in Tesco is all you have then any money moved gains an extra 2% pa rate for the time until maturity.


eg £250 left in Tesco for 6 months earns 0.5 x3 % of £250=£3.75, whereas, if moved into Nationwide it earns 0.5x5%of £250=£6.25


However,if elsewhere you have money earning less than 3% ,then use this money and leave the £3000 in Tesco (assuming the full £3000, as you are unlikely to have money earning less than 3% while there is room in the 3% account.


The Tesco account is fine for those opening it before February 2017, as these early accounts have the 3% guarantee without the need for a named payment inwards and 3DDs.

teddysmum

Outsider_83 wrote: »

Interesting points.


Next month I will have two regular saver accounts (Nationwide and First Direct) expire, they currently feed from my Nationwide Flex direct account (5%) which is due to revert to 1% so need to better thing. The value of my regular savers is £5k in total, however with my salary going into my main account each month I will have more money to play with.

Our ending offer,maturity of savers is even worse than yours.


First TSB cut the current account interest and amount it's paid on,so the non-earning money was removed from there (3 accounts between us). Then the 5% savers (2) matured but that was soon fed into two Nationwide savers which took in up to £500/month.


The Nationwide current accounts (3) reduced to just 1%, but the full amounts have stayed there for 1% as there is more money to juggle and the two sole accounts ensure the 5% saver.


In the event of nothing better, we have started 2% TSB savers, but the Nationwide savers now mature, this month and a new setup will only take £250,instead of £500. Meanwhile the 60+ bonds have matured, so it's a few more Premium Bonds to make my stake equal to my husband's and the rest will go into a Tesco internet saver, in the hope of something better cropping up soon, as has been hinted.


Other regular savers are out as the mandatory current accounts require the bugbear DDs, which we don't have spare.

RG2015

teddysmum wrote: »

Other regular savers are out as the mandatory current accounts require the bugbear DDs, which we don't have spare.

There are no requirements for the First Direct current account which opens the the door to the 5% regular saver for £300 per month.

PS The monthly funding after 6 months is not required if you open a First Direct savings account and put £1 in it.

teddysmum

RG2015 wrote: »

There are no requirements for the First Direct current account which opens the the door to the 5% regular saver for £300 per month.

PS The monthly funding after 6 months is not required if you open a First Direct savings account and put £1 in it.

Thanks. I'll have a look at that.