What kind of savings account should I use?

Vanchatron

I have a savings account at the moment (Halifax Instant Saver) where I put in around £50-100 a month. I've only been doing it for a few years so I've not saved up that much yet, but currently have around £2500 in savings. Not a massive amount, I know, but quite proud that I've managed to not actually touch it that much considering it's the first savings account I've ever had.

Recently though I was thinking that perhaps I should change to a different kind of savings account, as the interest I get with my current one is around £0.58 per year haha. Not that I'm expecting to make a lot of money with the interest, especially considering I've only got £2500 in there, but I figured I may as well look to see if there's any better options than what I've currently got.

What do you guys suggest?

Thanks a lot.

Bigwheels1111

Do you need access to the money, short notice or not for a year.
Choose one from the list here below.
Fixed, notice or easy access.
Al Ryan 1.9% paid monthly and easy access if you not sure when you will need the cash.

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

Vanchatron

Thanks for the reply... I don't usually withdraw, but there have been times where I've been a little short on cash so have had to withdraw £10-20, something like that.  I always put it back in on next pay day though.

In this case, would there be an ideal one from the list you linked that you'd recommend?

Also, am I right in thinking that 1.9% is paid monthly or was that a typo from you?  Just curious as that would mean that I'd be getting a monthly payment of £47.50 which is a massive improvement over the £0.58 I'm getting annually at the moment.  Seems a bit too good to be true actually.

Pompeydave1967

£47.50 over the year unfortunately, £3.95/month approx.

Bigwheels1111

Just looked at Al Ryan and you need 5k to open, so not and option.
Zopa is at 1.79%. £2500 gives £44.75 ish a year and £3.72 a month.
If the money and interest is left in the account you get £45.25 and £3.77 a month.

Albermarle

Moneyfacts.co.uk | Compare Savings, ISAs, Mortgages & More

Another comparison site

Daliah

For your future monthly savings, consider using one of the Regular Saver accounts. Most of them lock your money up for 12 months, but there are one or two which let you withdraw, or close the account, without penalties. 

Santander might be of interest - their Regular Saver pays 2.5% and they currently have a £160 current account switch offer which you might want to consider alongside moving your savings. You can also take money out of the Santander Regular Saver whenever you like.

You don't have to switch your actual current account - you could just open another Halifax current account, add a couple of DDs to it (e.g. a temporary £1 to the Lottery, and a temporary £1 to a Charity), and switch it to Santander. You then have access to the Santander Regular Saver, and  - depending which Santander current account you choose - their DD cashback offering.

You can also forego the Santander switch offer and just open a current account with them, for access to their Regular Saver. But it seems a shame to ignore the £160 .....

Beddie

It's a relatively small amount of money, so trying to get an extra 0.25 here and there is a complete waste of time.

Pick a bank which is consistently appearing in the best rate tables, such as Marcus, and keep on building your savings, you'll soon have a decent amount. 

Daliah

Beddie said:

It's a relatively small amount of money, so trying to get an extra 0.25 here and there is a complete waste of time.

Pick a bank which is consistently appearing in the best rate tables, such as Marcus, and keep on building your savings, you'll soon have a decent amount. 

Marcus is a really bad example for keeping your money in. Not quite as bad as the High Street banks, but still bad. Catch depositors with an eyebrow-raising interest rate (like Chase also did), then rely on the savers to say trying to get an extra 0.25 here and there is a complete waste of time, and exploit their inertia to the bank's advantage.

Reality is that very often it isn't just an extra 0.25%, but often double or even 3 times as much. A Santander RS pays a whole 1% more than Marcus, Natwest/RBS pay over double the Marcus interest, especially on small amounts.

I an era where it takes just minutes to open new accounts and to move money from A to B, from the comfort of your own home, any money saving expert will not be willing to let banks exploit them.

Millyonare

For me, I'd be actively switching current accounts (from a secondary account with 2 direct debits) every 2-6 months. Getting an extra £500, and a huge +20% taxfree return ("interest"), should be easily doable. For example, Nationwide today will gift a free £100 plus a 5% savings account. All for a few clicks of a button.

There is also the potential to use cashback debit cards, like Santander, for mandatory unavoidable bills (such as electricity, council tax). That could generate another 1% return per year ("interest").

Watch one's credit score. Don't hop between banks (or banking groups) too often. Switching takes diligence, preparation, organisation, calmness and patience.

For me, I'd be looking to get to at least £3,000 within a year.

Good guide here.

https://www.moneysavingexpert.com/banking/compare-best-bank-accounts/

Not investment advice, etc. Dyor.

Daliah

Millyonare said:

 .

There is also the potential to use cashback debit cards, like Santander, for mandatory unavoidable bills (such as electricity, council tax). That could generate another 1% return per year ("interest").

Santander does not have a cashback debit card. They pay cashback in certain Direct Debits. Two very different things.

The bank with the cashback debit card, for 12 months, is Chase (whose savings account  doesn’t have a leading rate any longer)

Millyonare said:

  

Watch one's credit score. Don't hop between banks (or banking groups) too often. Switching takes diligence, preparation, organisation, calmness and patience.

 

Credit score is a largely meaningless number. What you do need to watch is too many hard searches in a short period of time but this only matters if your are planning to apply for large credit (mortgage etc) in the next 6-12 months

Millyonare said:

For me, I'd be looking to get to at least £3,000 within a year.

I don‘t want to dampen your enthusiasm but £3,000 from switching and cashback in one year is a very, very steep target.