Advise on setting up Accounts

Dleon

Good day MSE,

First time poster, long time lurker here. I had an image I wanted to post but I cant because of the restriction on being new to the forums. Basically it states you to have 4 accounts: Incoming (Salary, Professional Fees, Business income etc), Saving and Investing (Emergency Fund, Stock Market, Mutual Funds), Outgoing (Monthly Bills, Rent, Loans), Spending (everyday expenses, food, groceries, transpo, shopping etc).

I've got the ff:

HSBC current account / credit card
AMEX Platinum Cashback Everyday (recently opened, don't know where to use this, please advise)
Starling Bank (just opened, not sure where to use this? Was looking for traveling purpose)

I've been inclined to look at these following banks: First Direct, Metro Bank, and Nationwide.

So far, I'm thinking of keeping HSBC as myincoming account First Direct, Metro Bank, or Nationwide as my savings account, now looking for an outgoing or spending account for things like rent, groceries, transport, ATM withdrawals. My investing account would probably be my income account. Please advise.

What is your experience, and how would you do it? I would very much love to know your inputs and thought. Thank you!

tacpot12

My experience is that you need a minimum of two accounts: A current account for income and daily/weekly/monthly expenses and a savings account for an emergency fund.

Depending on how you are at managing your money, a second Savings account can be useful for budgeting. I make a monthly payment to a second savings account for all the expenses that occur annually, e.g. car tax.

A credit card account can be useful to pay for things that you have saved for or need urgently, as savings accounts don't usually allow you to pay for things directly. So you pay with the credit card, then clear the balance from your budgeting account if is something you have saved for, or from your emergency fund if was an unplanned expenditure.

You only need an investment account when you have money to invest, and in the UK, most people should only invest via a Workplace or Personal Pension until they have saved enough to pay for their retirement. So you don't need an investment account, you need a Personal Pension (or to make additional contributions into your workplace pension).

I have an Amex card for years but never used it as I don't know anywhere that accepts them. It comes free with a Mastercard I have and use, so I haven't cancelled it, but I don't think it will ever be used. I think you should cancel yours as it is a risk if the card is lost or stolen and I can see no advantage to having it. I keep mine in my fire safe rather than my wallet.

Ben8282

tacpot12 wrote: »

I have an Amex card for years but never used it as I don't know anywhere that accepts them. It comes free with a Mastercard I have and use, so I haven't cancelled it, but I don't think it will ever be used. I think you should cancel yours as it is a risk if the card is lost or stolen and I can see no advantage to having it. I keep mine in my fire safe rather than my wallet.

You don't know anywhere that accepts American Express? Most supermarkets, petrol stations, department stores, restaurants, railways ... for a start. Rather foolish of you never to have used it if you had an Amex/MasterCard duo account as you have been missing out on the higher rate of whatever rewards you got with this duo account. Anyway good news for you is that as Amex have now terminated their agreements with the banks your account will soon revert to Mastercard only (surprised this hasn't already happened).

Dleon wrote: »

AMEX Platinum Cashback Everyday (recently opened, don't know where to use this, please advise)

See above. American Express is widely accepted these days. Use it and get your cashback.

tacpot12 wrote: »

I think you should cancel yours as it is a risk if the card is lost or stolen and I can see no advantage to having it.

Bad advice.

Dleon wrote: »

Good day MSE,

First time poster, long time lurker here. I had an image I wanted to post but I cant because of the restriction on being new to the forums. Basically it states you to have 4 accounts: Incoming (Salary, Professional Fees, Business income etc), Saving and Investing (Emergency Fund, Stock Market, Mutual Funds), Outgoing (Monthly Bills, Rent, Loans), Spending (everyday expenses, food, groceries, transpo, shopping etc).
I disagree. Leaving aside the fact that it is prudent to have a second current account for other reasons, ONE main current account is needed for Incoming, outgoing and spending. Concerning Saving and Investing, yes you should have some savings somewhere. Do you actually have any Mutual Fund and Stock Market investments? If you don't then forget this until you do. As for where you should put your savings, that really depends on what sort of amount we are talking about here.

I've got the ff:

HSBC current account / credit card
AMEX Platinum Cashback Everyday (recently opened, don't know where to use this, please advise) Most places that accept credit cards. Petrol stations, supermarkets etc etc. Use it and get your cashback. Repay in full every month otherwise the interest will negate the cashback.
Starling Bank (just opened, not sure where to use this? Was looking for traveling purpose)
Why did you open the account if you don't know what to do with it? Keep this as your second/reserve current account. The debit card could be useful for foreign ATM withdrawals. You could perhaps use this account for your savings/emergency fund.

I've been inclined to look at these following banks: First Direct, Metro Bank, and Nationwide. Why?

So far, I'm thinking of keeping HSBC as myincoming account First Direct, Metro Bank, or Nationwide as my savings account, now looking for an outgoing or spending account for things like rent, groceries, transport, ATM withdrawals. My investing account would probably be my income account. Please advise. Use your HSBC account and forget the rest.

What is your experience, and how would you do it? I would very much love to know your inputs and thought. Thank you!

Don80

I use three accounts on a regular basis. I have my main accounts with the Bank of Scotland. One is where my salary is paid into with a couple of small direct debits to qualify for the interest and cashback on the account. My standing order to my savings account also comes out from there. The other Bank of Scotland account is where my bills come from. My third account is with TSB and that's where my credit cards are paid from - I just pay in what I plan to clear each month. I really only keep it as it's wise to have an account with a different bank.

Working this way means that when I get paid, I transfer money for bills and cards, then I know what's in my main account is mine to spend. You could have more than one account with your existing bank, there's no need for them to be at different banks - the main thing is that the account works for its purpose. If you're shopping from it, Bank of Scotland and Halifax pay out on cashback on spending so that suits my purposes. (the second Bank of Scotland account is a Platinum account, so I get my travel insurance, AA and mobile insurance far cheaper than when I was paying separately, so all my bills come out of that account)

I find this really simple and easy to manage. The fact that my two main accounts are both Bank of Scotland means I can see it all on mobile/internet banking so keeping track of what has been paid, or has still to be paid is easy - they also let you put in a future date and it tells you how much they expect your direct debits and standing orders to be by that date, which is handy.