Piggybacking advice

bpcy22

Hi,

I am new to this site so please forgive my post if what I about to ask has already been mentioned.

I have just been reading Martins thread about savings accounts and Piggybacking and setting up separate accounts:



Bills (including mortgage)Family FoodBig purchases (sofa, car, kitchen)HolidaysChristmasSavings & Emergency Fund

I was wondering if anyone had setup one of these accounts and how to go about setting these up for ourselves.

I have a Virgin "oneaccount" and tried to setup e-accounts before but the problem I had was that even though I setup one for mortgage one for car one for holidays etc the money was still in the oneaccount and we could get at it thus we always spent it without realising, therefore not having any savings when the big bills arrive.

What I would like to do is setup a standing order to move say £100pm to accounts not within the oneaccount thus I would only access this when I had to pay car tax/insurance or pay for the holiday. I would like these accounts to earn some interest as I would only touch them once/twice a year as required. The idea being that this is money that is to be paid for the essentials.

Has anybody else setup saving accounts like these and if so with whom?
How easy was it?
Is the interest rate good/reasonable?

Thanks for any help to a newbie.
BPCY22

Rafter

BPCY22,

Sounds like you want a savings account with a debit card basically? Not many of those about - and they usually come with minimum deposits per month etc.

One thing that will help you is 'faster payments' the new system launched yesterday which will allow immediate transfers between accounts at certain banks.

I think you need to find yourself a 'best buy' regular savings account to achieve what you want. Barclays bank have a 'regular saver' paying 7.49% at the moment.

You may need to switch accounts in 12m time though when the introductory rate expires.

Remember though - that 'offsetting' your savings in your mortgage account is very tax efficient. The best way to achieve what you want is a disciplined budget to force yourself to save.

R.

Good luck

R.

bpcy22

Thanks Rafter.

When we setup the OneAccount that was our thoughts too, offsetting, takin payment holidays, overpaying etc... trying to pay off our mortgage as quick as possible. However, since starting the account we have had a second child. We have had an incredible increase in our basic monthly costs (like everyone) and it has been too easy to use the borrowing "facility" thus just increasing our mortgage.

I know it is hurting now and we have to cut down and I have read Money Saving Expert and Motley Fool recommended to us. We have tried to cut down in other ways but I need to be able to move the money out of the ONEACCOUNT into another or several savings account as described by by Martin on his Budget Planner page. Only problem is he does not describe how to setup these accounts. Should I open an several accounts with the Major Banks or Internet sites (cahoot etc) or do it with esaver on the OneAccount again. Its difficult as there is always a large bill to pay...

I'm trying to be optimistic that we will be able to reduce our outgoings if we can plan and put the money away. It's just how and where to set it up that I need to focus on?

Thanks for your help.
BPCY22

jopwo_87

Natwest-as much as i hate them right now- do a savings account, an esavings one, with a solo card

Poosmate

Hi Bpcy,

I have 2 current accounts and an ISA with HSBC and have found this works for me.

My main current acct has my salary paid into it. Same day £x is transferred to 2nd current account (Bills account). I've set up all of my DD's and SO's to pay all the household bills, gas, elec, telephone, water rates, council tax, mortgage, internet etc. and £x covers all of these + a few quid. I also pay a small amount from that into my ISA.

So every month I know all of my bills will be paid and I will be saving a little bit too. What is left in my "main" current account is what I have to live on - daily expenses, petrol, food shopping and CC payments. I do always go into my overdraft on that account and will do until I have saved enough to pay it off before I get paid. At the moment it gets paid off on payday.

This way works for me although some believe having more accounts can just land you into more debt. I guess it's just being disciplined - I have an overdraft facility on my bills account but never use it. Yes my other account is a bit of a mess but it's manageable and enables me to pay off my debts slowly but surely.

I also fell into the "oneaccount" trap too. They are fabulous accounts attached to your mortgage if you are good with money and able to live within your means otherwise they do have a dark side. Luckily I realised this and didn't splash out on extravagances with all this extra credit I had available to me on a low APR. I did have to use it to make ends meet for a while and have transferred some higher APR debt onto it - it's cheaper in the longrun because I can concentrate on reducing my higher APR CC debts quicker.

Sorry, bit of a long post but hope it helps

Poo

Kavanne

jopwo_87 wrote: »

Natwest-as much as i hate them right now- do a savings account, an esavings one, with a solo card

If it does, it'll only work at ATMs, not for puchases in shops.

heppy23

I explain the workings of mine here http://forums.moneysavingexpert.com/showthread.html?p=10296701

You have to be discplined to not touch the account where the money sits waiting to go out from.

You also need a certain amount of money to "prime" the system due to the lag caused by BACS payments. This won't be needed when all the banks are using the faster payments system but for me that will be ages as I get paid by co-op into halifax then it goes to Yorkshire BS and Abbey.

bpcy22

Thanks for your replies everyone.I will need to do some more research but it looks feasible. I might have a bit of difficulty in that I still want my salary paid into the ONEACCOUNT to get the most use out of it before some is transferred to these new accounts.I will give it a go though.Thanks for your helpBPCY22