Money in current account

Susan1942

I no longer have a savings account but have just over £30,000 in my Santander current account. When I first had the account it was paying.I think? 3 % interest on up to £20,000 
I previously had an account where I paid something like £20 a month.  This came with some benefits.  Then they changed it to what I think is 123 account.  Currently I pay a fee of £4 a month.  I do get some cashback on my Council Tax, Mobile phone, and one other bill may be water.  When I look at moving some money to a savings account the interest rate is so low it hardly seems worth it 
I am intending to purchase a carpet for my lounge / dining room and hall.  Also to purchase new sofa and do some decoration of these two rooms.  My initial thought was that I would take some money from a S&S ISA.  I have got 3 other investment bonds that I had been concerned about last year early on in the Pandemic.  Ok be of them had lost around £3000-4000 but that has recovered and in fact risen by a further £5000.  They other 2 bonds didn't suffer any loss and have risen slightly during this period.  I would normally take the money I need from one or two if the bonds.  But with almost no interest on savings it might be better if I use the money from my current account.  I reckon I will be spending around £15.000 
Any advice  would be appreciated.  Last year I was tempted to take the money from the bond that had sustained  loss but on the advice on these forums I sat tight.  This proved absolutely to be the right advice. 
Sue  

Coffeekup

I'm no expert on savings, but I linger in this forum a bit..... I'm guessing most will say premium Bond's if your looking for something safe... That's as far as my knowledge goes...

kidmugsy

Use the money in your current account if you think stock markets will hold up.

If you expect a crash, hoard your cash and instead withdraw from your bonds or ISAs.  (I take it that your bonds are Life Insurance Investment Bonds?)

Another possibility is to ask yourself whether you aim to keep a certain allocation of capital across your investments - such and such a percentage in cash, and the rest in bonds/equities, say.  If you do, you can withdraw in such a way as to preserve your preferred allocation.

Without the proverbial crystal ball nobody can know which will work out best.

kuratowski

How much cash to keep and where to keep it, these are two separate questions.

How much cash?  The usual advice would be at least 6 months' of expenditure, if you are working, in case of income loss.  Alternatively, if you are retired, then a higher amount of cash (at least 3 years'), unless your income is very secure (i.e. defined benefit + state pension).  Do bear in mind that investments can take days, or weeks, to liquidate, so don't let your cash reserves get too low.  If you are planning a large cash outlay this should be added on, it's not part of the baseline cash allocation.  So, is £30k enough cash for you to be holding - only you can answer?  If it's not enough cash, then it would probably be wisest to sell some risky investments, in order to fund your redecoration and furniture plans, and avoid depleting your cash.  If you are holding too much cash, then spend some of it.

Where to keep cash?  Just at the moment, premium bonds look good, although historically they don't always offer the best return, at the moment they pretty well do.  But this is one that depends a great deal on the amount - a small amount in premium bonds won't yield the same as a large amount.  Some people swear by regular savers and have dozens of the things (all individually small amounts but it adds up) - there is a dedicated thread for these accounts.  Otherwise, the market for savings is very fast, the best available account has probably changed while I was writing this post, it literally changes every day and during the day.  For up to date info, check the list of best buy accounts on the MSE guide, or the one over on moneyfacts.

MX5huggy

I was almost exactly the same, large 123 current account balance till last September. I’ve moved the bulk of the balance to Premium Bonds and kept topping up since started at £15k currently £32k and have averaged £25 every month (which is about average). As the current account balance is now low and does not generate much interest (less than £2 per month at 0.3%) I have swapped the account to the 123 Lite account which is £2 per month instead of £4 but pays the same Cash Back, I make about £3 per month over the fee (my communication bills, 1%, are high with a 900mb fibre connection and 5 mobile phones). Swapping to 123 lite is easy and painless account number stays the same etc.

The MSE thing to do is take one of the introductory offers from the other banks (£125) I can’t be bothered. 

Robin9

Santander 123 does still pay interest  -  a token 0.3% - but only on the first £20,000.   If you don't already have a  second account  open one and transfer £10,000  across.

Don't forget Premium Bonds and the Lottery .

colsten

MX5huggy said:

The MSE thing to do is take one of the introductory offers from the other banks (£125) I can’t be bothered. 

Very few of those who go after introductory offers actually switch their main account.

Susan1942

Thanks for all your responses.  I need to give it some further thought.  I am retired with no mortgage. My biggest outgoings is the maintenance contract charges on my retirement apartment.  This is now in excess of £5000 a year.  Plus  ground rent and property insurance.  Some of that maintenance goes in to a sinking fund, redecoration fund, and underground garage fund for those of us who own a space.  I have enough pension income which is more than my outgoings.  I have helped my 2 grandchildren with their costs whilst doing their degrees. Paying rent etc.  Plus paying for medical expenses for one of them.  
I really need to sit down and have a look at all my costs and how much money I have in total.Thanks again for all your advice.  I do appreciate it.
Sue 

Susan1942

Can I open a second account with Santander ?  I imagined I could only have one account with them...I do have the regular savings account . Pay £200.a month into it but it's just 12 months and then goes in to.my.current account and I start a new one.  Due to end August.this year 

eskbanker

Susan1942 said:

Can I open a second account with Santander ?  I imagined I could only have one account with them...I do have the regular savings account . Pay £200.a month into it but it's just 12 months and then goes in to.my.current account and I start a new one.  Due to end August.this year 

You can open other accounts of theirs but can only open a second 123 if one is in your sole name and one is joint, as per https://www.santander.co.uk/personal/current-accounts/123-current-account

You may only hold a maximum of two 1|2|3 Current Accounts, one in your own name and one in joint names.

colsten

Susan1942 said:

Can I open a second account with Santander ?  I imagined I could only have one account with them...I do have the regular savings account . Pay £200.a month into it but it's just 12 months and then goes in to.my.current account and I start a new one.  Due to end August.this year 

You can get at least twice the rate of interest in Regular Savers elsewhere https://forums.moneysavingexpert.com/discussion/6106986/regular-savings-accounts-the-best-currently-available-list

You can also get 2% AER on £1,000 in a Virgin Money account.

And yes, you could have a Santander Everyday account alongside your 123 account. You can also downgrade your 123 to a 123 Lite, which will still pay you the same cashback but only costs £2 a month. Granted, you will lose the interest on £20k, around £4.80 a month. However, you can get more interest elsewhere, especially if you are prepared to split your money. You certainly should move the £10k that earns no interest, and loses even more value to inflation than your £20k currently do, to somewhere that pays interest, or into Premium Bonds. List of savings accounts: https://moneyfacts.co.uk/savings-accounts/