Mrs FLC is on board

FunLovinCriminal

Hi all
I've been using 2020 to sort our finances out.  Now, in June, Mrs FLC wants to join in.
I have a e-isa with Virgin, and a regular savings account with Bank of Scotland.  She is paying £50 a month in a savings account with Tesco that pays 0.01% interest.  She wants an account but I am struggling to find one that matches Tesco.  She wants an account that gives her a bank card - to make withdrawals when she wants.  The decent rates I find are fixed (no withdrawals) or do not come with a bank card.  She would like monthly interest if possible too. Oh and a killer interest rate would be nice too.
Does such a beast exist? Can any one help?
Many thanks
FLC

Zanderman

What about an interest-paying current account?  Has a debit card. And can be quite competitive for interest - certainly better than Tesco!
Have a look at
https://www.moneysavingexpert.com/banking/compare-best-bank-accounts/#interest
And remember, if you're new to the multiple current account game, that you don't need to switch or close your existing one to open a new one.  just open another one.
(And also, if the new account 'needs £500' or whatever paid in each month to trigger the interest rate, remember that it only needs to be paid in - not left there - so you can take it out again, so it won't need to be new money, just the same money)

FunLovinCriminal

Apologies, I should have added - she is paying in £50 per month, and isn't one of these committed to moving £1000 in and out to get a better interest rate.
She just wants her £50 standing order to go in, and make the money work harder than 0.01% interest

Zanderman

FunLovinCriminal said:

Apologies, I should have added - she is paying in £50 per month, and isn't one of these committed to moving £1000 in and out to get a better interest rate.
She just wants her £50 standing order to go in, and make the money work harder than 0.01% interest

Ok...

But if she wants a decent interest rate and a bank card a current account may be her only option.

How much is in the account?  I assume it's rather more than the 50 that goes in each month.  Otherwise there's little point in getting a better rate.

TSB Classic Plus, for example, offers 1.5% on the first 1500 in the account, If you pay in 500.

So if, say, your wife has 750 saved, adding 50 a month, and she opens a TSB Classic Plus to put it all in, all she needs to do, other than paying in the £50, is to withdraw £450 one day each month and pay it straight back in again. On the same day. To and from an outside account - yours perhaps. That would trigger the condition and she'd get the interest. 

It's a very easy hoop to jump through one day a month..

lhsecons

Maybe the Virgin Money current account. It pays 2% on up to £1000, comes with a card and requires no other conditions. It also has a linked savings account currently paying 1% (falling to 0.5% on 1st July) into which she could put or move any amounts above £1000.

FunLovinCriminal

...not sure if I am doing this correct or not.
She currently has £200 in the account and saves £50 per month.  On the savings calculator, the difference after one year is only like £9.
Is that correct?

bowlhead99

FunLovinCriminal said:

...not sure if I am doing this correct or not.
She currently has £200 in the account and saves £50 per month.  On the savings calculator, the difference after one year is only like £9.
Is that correct?

If she has £200 now and puts in another £50 every month, the account will be at £800 a year from now. If it went from £200 to £800, the average amount of money in the account will be somewhere between those extremes, a bit more than £500.

If you have an average account balance of £500 for a year, and the account pays 1% a year, that's about a fiver of interest. So, if you found an account paying 2%, it would be close to a tenner. If you continue to use an account paying 0.01% a year, it's more like five pence.  So, a higher interest rate is obviously better but I don't know that I would bother opening up a brand new account just to make a fiver or a tenner.    

By the second year, there will be more money at the start of that year and a higher average balance. So maybe it would be worth looking at what accounts are around at that point. But you mention she wants a bank card, so presumably she intends to take money out from time to time. If she only puts £50 in each month, and takes some out from time to time, the account balance is going to grow more slowly and obviously a lower average balance will pay less interest than a higher average daily balance. With the amounts involved, it is probably better to just focus on building the savings up, rather than exactly how much interest you earn, because the interest won't be a lot when the rates are not very high and the amount of money isn't very high.

Sailtheworld

A better approach, IMO, is to focus on making the monthly contribution bigger. That's going to have a much bigger impact on your total savings than a penny and a half in the pound. It'll also train you to live on less money. The other thing is to try and minimise those dips in.

lhsecons

FunLovinCriminal said:

...not sure if I am doing this correct or not.
She currently has £200 in the account and saves £50 per month.  On the savings calculator, the difference after one year is only like £9.
Is that correct?

This is true on that amount of money. However if you feel it’s not worth it, I don’t really see the point of your original post. Did you somehow expect somebody to come up with an unknown account paying a large % in interest which nobody else had heard about?

FunLovinCriminal

lhsecons said:

FunLovinCriminal said:

...not sure if I am doing this correct or not.
She currently has £200 in the account and saves £50 per month.  On the savings calculator, the difference after one year is only like £9.
Is that correct?

This is true on that amount of money. However if you feel it’s not worth it, I don’t really see the point of your original post. Did you somehow expect somebody to come up with an unknown account paying a large % in interest which nobody else had heard about?

After posting the thread, I found the savings calculator on here.
I imagined that the higher interest would make more of a difference.
It seems like it doesn't

badger09

FunLovinCriminal said:

lhsecons said:

FunLovinCriminal said:

...not sure if I am doing this correct or not.
She currently has £200 in the account and saves £50 per month.  On the savings calculator, the difference after one year is only like £9.
Is that correct?

This is true on that amount of money. However if you feel it’s not worth it, I don’t really see the point of your original post. Did you somehow expect somebody to come up with an unknown account paying a large % in interest which nobody else had heard about?

After posting the thread, I found the savings calculator on here.
I imagined that the higher interest would make more of a difference.
It seems like it doesn't

Ask Mrs FLC 
For every £50 you save, would you rather receive every year, an extra £1 or £0.005?

That looks like quite a difference to me, though not a life changing amount