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5% interest paying current accounts
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One thing worth considering is Nationwide only offer 5% interest up to £2,500 I think it is.
Someone like Satander offer a lot less interest at just 2% off the top of my head but this is up to £20,000.
So if you had say £18k in your account, you'd earn MORE interest with Santander than you would with Natwest.
Also I don't want to hijack your thread but with the flexdirect account, could you take the £100 joining reward then leave? What's the minimum length of time you have to stay with them?0 -
The Santander 123 account gives interest on £20,000 of 1.49% (1.50% AER) but after the £5.00 monthly fee this is equivalent to a maximum of 1.19% (1.20% AER).One thing worth considering is Nationwide only offer 5% interest up to £2,500 I think it is.
Someone like Satander offer a lot less interest at just 2% off the top of my head but this is up to £20,000.
So if you had say £18k in your account, you'd earn MORE interest with Santander than you would with Natwest.
Also I don't want to hijack your thread but with the flexdirect account, could you take the £100 joining reward then leave? What's the minimum length of time you have to stay with them?0 -
One thing worth considering is Nationwide only offer 5% interest up to £2,500 I think it is.
Someone like Satander offer a lot less interest at just 2% off the top of my head but this is up to £20,000.
As RG2015 points out above, it's not 2% and there's a monthly fee too.So if you had say £18k in your account, you'd earn MORE interest with Santander than you would with Natwest.
I assume you mean Nationwide not Natwest. And your comparison isn't valid anyway - you're locking up 18k instead of just 2.5k.Also I don't want to hijack your thread but with the flexdirect account, could you take the £100 joining reward then leave? What's the minimum length of time you have to stay with them?
Answer easily available on the nationwide website. I think it is 3 months. But why oh why would you want to leave early? There's 12 months of 5% interest to be had.0 -
I have got all of these. I am waiting a few months before I can another Nwide 5% account.
I have set up another Nwide account to get the next bonus as/when it happens.
I assume you are referring to 5% on their regular saver. If you think you are going to get it on another current account then you will be sadly disappointed.0 -
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The Santander 123 account gives interest on £20,000 of 1.49% (1.50% AER) but after the £5.00 monthly fee this is equivalent to a maximum of 1.19% (1.20% AER).
If your cashback from direct debits meets or exceeds £5 per month, then you get the full 1.5%. Anything between 1p and £4.99 in cashback gives you a sliding scale of between 1.2% and 1.5%.
Too many people insist on stating that the maximum interest rate with a 123 account is actually 1.2%, but this is not true.0 -
ValiantSon wrote: »If your cashback from direct debits meets or exceeds £5 per month, then you get the full 1.5%. Anything between 1p and £4.99 in cashback gives you a sliding scale of between 1.2% and 1.5%.
Too many people insist on stating that the maximum interest rate with a 123 account is actually 1.2%, but this is not true.
If you open a Santander 123 Lite Current Account you can get the same cashback and only pay a fee of £1 a month.
So to have the Santander 123 current account it will cost you £4 a month; even if you get enough cashback to cover the full £5 fee you are still "loosing" £4 a month to get the 1.5% interest rate.
So the effective interest rate after this deduction assuming a balance of £20,000 is 1.26%. There are several easy access savings accounts that pay a higher rate of interest than this and on much larger balances.
So if anyone is thinking of opening one of these accounts they would be much better off opening a Santander 123 lite account for cashback and the top easy access savings account for any savings.0 -
If you open a Santander 123 Lite Current Account you can get the same cashback and only pay a fee of £1 a month.
Yes, but no interest.So to have the Santander 123 current account it will cost you £4 a month; even if you get enough cashback to cover the full £5 fee you are still "loosing" £4 a month to get the 1.5% interest rate.
I'm not really though, am I, because I don't pay that £4, and if my cashback exceeds £5 per month, then the return is greater. For the sake of argument, let's say I earn £7 per month in cashback. That means that for my £5 I have made £2 in cashback and c.£24.83 in interest (£26.83). If we take that figure and equate it as a per centage return on my £20,000, then I have an effective rate of 1.61%. If instead I had the 123 Lite account then I would realise £5 cashback, but need another account to hold my £20,000 in. Using the best paying easy access savings account (without a one year bonus) I would currently get 1.31%, so earning me c.£21.83 per month in interest. This added to the cashback would give me a return of £26.83 in interest equivalent, or 1.61%. The upshot of this is that I could get the same return, or better by using a 123 account, rather than a 123 Lite and an easy access savings account, and who knows what will happen to those easy access rates next month.So the effective interest rate after this deduction assuming a balance of £20,000 is 1.26%.
No, that is not just assuing a balance of £20,000, it also assumes that the cashback received is exactly £5.
I get 1.5% interest. I don't get as much money from cashback, but I do get more than putting the money in an easy access account and using 123 Lite. Your comparison is deeply flawed.There are several easy access savings accounts that pay a higher rate of interest than this and on much larger balances.
There are no easy access accounts paying 1.5% interest.So if anyone is thinking of opening one of these accounts they would be much better off opening a Santander 123 lite account for cashback and the top easy access savings account for any savings.
Not necessarily. Personal circumstances vary. It is very unwise to make absolute statements like this.
Once again, you are taking your own narrow view and insisting that it must be so for everyone.0 -
ValiantSon wrote: »Yes, but no interest.
I'm not really though, am I, because I don't pay that £4, and if my cashback exceeds £5 per month, then the return is greater. For the sake of argument, let's say I earn £7 per month in cashback. That means that for my £5 I have made £2 in cashback and c.£24.83 in interest (£26.83). If we take that figure and equate it as a per centage return on my £20,000, then I have an effective rate of 1.61%. If instead I had the 123 Lite account then I would realise £5 cashback, but need another account to hold my £20,000 in. Using the best paying easy access savings account (without a one year bonus) I would currently get 1.31%, so earning me c.£21.83 per month in interest. This added to the cashback would give me a return of £26.83 in interest equivalent, or 1.61%. The upshot of this is that I could get the same return, or better by using a 123 account, rather than a 123 Lite and an easy access savings account, and who knows what will happen to those easy access rates next month.
The 123 lite account only charges a £1 fee so you would get £6 in cashback.
#1 With a £20,000 balance and £7 cashback on a 123 account you would get (yearly): £300 interest + £84 cashback -£60 fee = £324
#2 With a 123 lite account and £20,000 in top easy access saver you would get (yearly): £263 interest + £84 cashback - £12 fee = £335
Option #2 provides a better overall return.ValiantSon wrote: »No, that is not just assuing a balance of £20,000, it also assumes that the cashback received is exactly £5.
I get 1.5% interest. I don't get as much money from cashback, but I do get more than putting the money in an easy access account and using 123 Lite. Your comparison is deeply flawed.
As you can see from calculations above you are wrong. The amount of cashback (as long as it is above £1 a month) is irrelevant in the calculations because both the Main and Lite account offer the same amount of cashback.ValiantSon wrote: »There are no easy access accounts paying 1.5% interest.
I was referring to the 1.31% account as above and using the effective interest rate of 1.26% as i calculated taking into account of the fee.ValiantSon wrote: »Not necessarily. Personal circumstances vary. It is very unwise to make absolute statements like this.
Once again, you are taking your own narrow view and insisting that it must be so for everyone.
I can show mathematically that any combination of cashback and savings amount that someone has which results in more than £1 of cashback will always be better off with option #2 above.0 -
The 123 lite account only charges a £1 fee so you would get £6 in cashback.
Yes, quite true.#1 With a £20,000 balance and £7 cashback on a 123 account you would get (yearly): £300 interest + £84 cashback -£60 fee = £324
No, £298 + £84 - £60 = £322#2 With a 123 lite account and £20,000 in top easy access saver you would get (yearly): £263 interest + £84 cashback - £12 fee = £335
No, £262 interest + £84 - £12 = £334Option #2 provides a better overall return.
Yes, quite right.I can show mathematically that any combination of cashback and savings amount that someone has which results in more than £1 of cashback will always be better off with option #2 above.
Fair enough. I still don't want the 123 Lite account, as it doesn't actually meet my needs. I use the 123 account as my hub. Switching to 123 Lite would see me lose interest on the money I would choose to leave in the account to cover all spending (without having to constantly adjust it).
Each to their own.0
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