Need some help with a savings account please!

saveaholic68

Hi, I have already used up my Cash ISA allowance for 08/09, so am looking for a new savings account until next year. I can only afford to deposit £100 per month, but also intend to deposit a few small sums -such as money earned from overtime, ebay sales, survey sites etc as and when I can... Trouble is, I don't know where to start. I don't want to go down the route of a stocks and shares ISA as I was talked into one of those once before, but closed it as I was losing money on it, and preferrably I'd like something at less risk. I'm also not comfortable with the Idea of internet banking, which I guess limits my options? I have read the article on the main site about regular savings accounts, but I don't understand how they work. Take for example this quote..

'Sadly regular saver accounts have often received negative publicity due to a flawed understanding of them, with comments like:

”Invest £3,000 for a year in a standard 5% savings account and you get £150 interest before tax, yet £3000 in a Regular Saver at 7% only earns you around £110 interest, so these accounts are poor.”

This is silly logic, as it assumes the £3,000 is doing nothing before you put it in the regular saver. In practice you're drip feeding the £250/month in, so the rest should be in another account earning high interest.'

With me though, the money I put into a savings account would be paid into my account on the 31st and put into the savings account on the 1st, so surely it couldn't have been earning any interest? Sorry this post is long, but I'm so confused about what to do, and the more I read, the more complicated it all seems - help!

Lokolo

Basically he m eans that having £3000 in the whole year is better than having £100 in each month at a higher rate, which is clearly true.

But if you don't have the £3000 at the beginning then a regular saver is fine, however, if you do have £1200 now then you may as well put it in a savings account altogether rather than £100 each month.

saveaholic68

Right I see, I dont have the £1200 now - I have basically put the bulk of my savings into the cash ISA in order to earn a full years intrest

Lokolo

saveaholic68 wrote: »

Right I see, I dont have the £1200 now - I have basically put the bulk of my savings into the cash ISA in order to earn a full years intrest

Yeh thats fine then, just do regular deposits of £100 in savings accout normally. Better earning some interest than none

redcar_2

This thread might help you as it has details of the various regular savings accounts. http://forums.moneysavingexpert.com/showthread.html?t=608697

The rates may change soon though due to the base rate cut although I'd imagine they will all change the same so the best ones will still be the best.

The simplest thing might be if your current bank does one of these accounts and then you could easily use it. Otherwise I know the west bromwich and skipton ones come with little bank books so if you have a branch near that might be a good option.

You can still get at this money if you really need it but would usually need to then close the account so if you want to dip in and out then a good rate savings account with no withdrawal penalties is probably better.

saveaholic68

Thanks for that, my bank has a regular savers account, so I will use that one - it looks easy to setup too, some great advice on that thread.