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    • Outsider_83
    • By Outsider_83 8th Mar 18, 11:48 AM
    • 163Posts
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    Outsider_83
    Best Holding Account
    • #1
    • 8th Mar 18, 11:48 AM
    Best Holding Account 8th Mar 18 at 11:48 AM
    Hi All,

    I've been researching a good holding account where I could keep several thousand before feeding to regular savers etc and the best I can find is Tesco at 3% - can anyone recommend a better account?
Page 1
    • 18cc
    • By 18cc 8th Mar 18, 12:08 PM
    • 528 Posts
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    18cc
    • #2
    • 8th Mar 18, 12:08 PM
    • #2
    • 8th Mar 18, 12:08 PM
    Please could you define what you mean by 'several'
    • Zanderman
    • By Zanderman 8th Mar 18, 12:48 PM
    • 1,592 Posts
    • 4,108 Thanks
    Zanderman
    • #3
    • 8th Mar 18, 12:48 PM
    • #3
    • 8th Mar 18, 12:48 PM
    Hi All,

    I've been researching a good holding account where I could keep several thousand before feeding to regular savers etc and the best I can find is Tesco at 3% - can anyone recommend a better account?
    Originally posted by Outsider_83
    Tesco's balance limit (for the 3%) is just £3k so you can't keep much in there actually earning interest. Other accounts with high interest (eg Nationwide FlexDirect at 5%) have similar limits (in Nwide's case £2.5k).

    So if you want a feeder account to feed several thousand out to regular savers these accounts will only be of limited use. Indeed at 3%-5% you may be best leaving the money there - regular savers, even the best ones at 5% per annum (pro rata) will only give returns of (roughly equivalent) 2.6% on the overall balance (5% interest per annum but most of the cash isn't there for the whole annum!)

    The obvious feeder account, in my view, is Santander 123, which pays 1.5% on up to £20k. You gain interest at 1.5% whilst in the 123 account and 5% per annum (if that's your reg saver rate) whilst in the reg saver. But 123 has a monthly charge which can be off-putting, unless you cover that with cashback on DDs from the account.
    • Outsider_83
    • By Outsider_83 9th Mar 18, 11:00 AM
    • 163 Posts
    • 21 Thanks
    Outsider_83
    • #4
    • 9th Mar 18, 11:00 AM
    • #4
    • 9th Mar 18, 11:00 AM
    Interesting points.


    Next month I will have two regular saver accounts (Nationwide and First Direct) expire, they currently feed from my Nationwide Flex direct account (5%) which is due to revert to 1% so need to better thing. The value of my regular savers is £5k in total, however with my salary going into my main account each month I will have more money to play with.
    • Outsider_83
    • By Outsider_83 12th Mar 18, 3:57 PM
    • 163 Posts
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    Outsider_83
    • #5
    • 12th Mar 18, 3:57 PM
    • #5
    • 12th Mar 18, 3:57 PM
    Just one last post to double check that Tesco is my best holding account?
    • colsten
    • By colsten 12th Mar 18, 4:08 PM
    • 9,026 Posts
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    colsten
    • #6
    • 12th Mar 18, 4:08 PM
    • #6
    • 12th Mar 18, 4:08 PM
    Just one last post to double check that Tesco is my best holding account?
    Originally posted by Outsider_83
    If your question is whether Tesco current accounts currently pay the best interest after Nationwide FlexDirect, the answer is yes, provided you are meeting the conditions for getting interest paid. As already mentioned, Tesco limit is £3K for interest purposes.
    • Outsider_83
    • By Outsider_83 12th Mar 18, 6:30 PM
    • 163 Posts
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    Outsider_83
    • #7
    • 12th Mar 18, 6:30 PM
    • #7
    • 12th Mar 18, 6:30 PM
    The only requirement I thought Tesco had was interest would only be paid on balances of £3k.

    As for Nationwide my 5% flex direct account is expiring.
    • northwalesd
    • By northwalesd 12th Mar 18, 6:48 PM
    • 285 Posts
    • 184 Thanks
    northwalesd
    • #8
    • 12th Mar 18, 6:48 PM
    • #8
    • 12th Mar 18, 6:48 PM
    The only requirement I thought Tesco had was interest would only be paid on balances of £3k.

    As for Nationwide my 5% flex direct account is expiring.
    Originally posted by Outsider_83
    From the Tesco current account T&Cs

    Credit interest guarantee terms and conditions
    3% AER/2.96% Gross variable credit interest on balances up to £3,000, guaranteed until 1 April 2019. To earn interest, each statement month you must pay in at least £750 and have at least three direct debits paid from your account (excluding direct debits to a Tesco Bank savings account). Although this rate is variable it will not drop below 3% AER during the guarantee period, provided you meet the interest conditions. Interest paid monthly.
    • Outsider_83
    • By Outsider_83 13th Mar 18, 10:30 AM
    • 163 Posts
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    Outsider_83
    • #9
    • 13th Mar 18, 10:30 AM
    • #9
    • 13th Mar 18, 10:30 AM
    Tesco looks a bit messier than I imagined and may not be a viable option. Is there anything else?
    • eskbanker
    • By eskbanker 13th Mar 18, 12:58 PM
    • 7,428 Posts
    • 7,998 Thanks
    eskbanker
    Tesco looks a bit messier than I imagined and may not be a viable option. Is there anything else?
    Originally posted by Outsider_83
    In order to benefit from (relatively) decent interest rates from current accounts, the quid pro quo is that these typically need a few direct debits to be paid out of them and also a minimum monthly amount paid in, i.e. the typical use of a 'main' current account.

    If you're unable or unwilling to jump through these hoops then that essentially leaves traditional savings accounts and lower interest rates, see https://www.moneysavingexpert.com/savings/savings-accounts-best-interest for further details....
    • Outsider_83
    • By Outsider_83 13th Mar 18, 1:37 PM
    • 163 Posts
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    Outsider_83
    Is it possible to renew the Nationwide account for another 12 months at 5%?
    • eskbanker
    • By eskbanker 13th Mar 18, 1:44 PM
    • 7,428 Posts
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    eskbanker
    Is it possible to renew the Nationwide account for another 12 months at 5%?
    Originally posted by Outsider_83
    No, as per https://www.nationwide.co.uk/products/current-accounts/flexdirect/rates-fees-overdrafts:
    If you have previously held a FlexDirect account you will not be entitled to the introductory rate or offer under a new agreement and therefore you will receive the standard 1% gross p.a/ AER (variable) interest rate.
    • RG2015
    • By RG2015 13th Mar 18, 2:35 PM
    • 1,259 Posts
    • 737 Thanks
    RG2015
    Is it possible to renew the Nationwide account for another 12 months at 5%?
    Originally posted by Outsider_83
    If you have a partner you could open a joint Nationwide FlexDirect current account and qualify for another 12 months at 5%. This would also entitle you to open a second Nationwide regular saver at 5%.

    I have chosen to keep my Nationwide FlexDirect current account which enabled me to open another 5% regular saver. All I keep here is £1 and transfer in £250 per month which then goes to the regular saver.

    I already had two Santander 123 current accounts with 1.5% on up to £20,000 each and these are what I use for funding my several regular savers. Yes, I know the £5 fee negates some of the benefits but along with the 5% Santander regular savers the 123 current accounts suit my requirements best.
    Last edited by RG2015; 13-03-2018 at 2:38 PM.
    • Outsider_83
    • By Outsider_83 14th Mar 18, 11:06 AM
    • 163 Posts
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    Outsider_83
    No partner so it looks like Tesco is my only option but there are hoops to jump through.
    • Zanderman
    • By Zanderman 14th Mar 18, 12:03 PM
    • 1,592 Posts
    • 4,108 Thanks
    Zanderman
    No partner so it looks like Tesco is my only option but there are hoops to jump through.
    Originally posted by Outsider_83
    I'm not sure, as I said in my earlier response, that tesco is worth it as a holding account for feeding reg savers.

    It only pays interest on up to 3k. But it is 3% interest. So to feed reg savers, you would be taking some of that 3k out of a 3% earning account to earn what exactly?

    If to a reg saver at 5% (the best available) that sounds better. But is it? As the money will be in bite-sized chunks scattered over 12 months most of it will only earn a proportion of 5% (12/12 of 5% for the first payment, dwindling to 1/12 of 5% for the final payment. So the money, once moved, will only be earning an average over the year of about 2.6% - less than it would have earned if you kept it in tesco.

    Of course there will be ongoing interest from tesco on the remaining balance as you draw it down to the reg saver. Which will add a bit. I haven't worked out how much, but perhaps you should as it seems a lot of effort to go to for minimal gain.
    • RG2015
    • By RG2015 14th Mar 18, 12:49 PM
    • 1,259 Posts
    • 737 Thanks
    RG2015
    I'm not sure, as I said in my earlier response, that tesco is worth it as a holding account for feeding reg savers.

    It only pays interest on up to 3k. But it is 3% interest. So to feed reg savers, you would be taking some of that 3k out of a 3% earning account to earn what exactly?

    If to a reg saver at 5% (the best available) that sounds better. But is it? As the money will be in bite-sized chunks scattered over 12 months most of it will only earn a proportion of 5% (12/12 of 5% for the first payment, dwindling to 1/12 of 5% for the final payment. So the money, once moved, will only be earning an average over the year of about 2.6% - less than it would have earned if you kept it in tesco.

    Of course there will be ongoing interest from tesco on the remaining balance as you draw it down to the reg saver. Which will add a bit. I haven't worked out how much, but perhaps you should as it seems a lot of effort to go to for minimal gain.
    Originally posted by Zanderman
    I agree and I keep £3,000 in my Tesco current account to get the full benefit if the 3%.

    You can also use the MSE regular saver calculator to factor in the interest on the reducing balance account as well as the regular saver. This is on the link below towards the foot of the page.

    https://www.moneysavingexpert.com/savings/best-regular-savings-accounts
    • Zanderman
    • By Zanderman 14th Mar 18, 2:03 PM
    • 1,592 Posts
    • 4,108 Thanks
    Zanderman
    I agree and I keep £3,000 in my Tesco current account to get the full benefit if the 3%.

    You can also use the MSE regular saver calculator to factor in the interest on the reducing balance account as well as the regular saver. This is on the link below towards the foot of the page.

    https://www.moneysavingexpert.com/savings/best-regular-savings-accounts
    Originally posted by RG2015
    Actually, having done that, and assuming it is correct, £3k in tesco current a/c feeing a 5% reg saver at, say, 250 pcm would earn, according to the calculator:

    Total interest earned: £122
    £41 from the normal savings [i.e Tesco ca] & £81 in the regular saver.
    If you'd kept the money only in the normal savings account [i.e Tesco ca] you'd have earned £90 in interest.
    So it might seem worthwhile despite my comments earlier as there seems to be a gain of £32.
    The total £122 is, btw, roughly equiv to 4% interest overall.
    But to get that there are all the hoops to meet the tesco account conditions...
    • teddysmum
    • By teddysmum 15th Mar 18, 12:07 PM
    • 9,044 Posts
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    teddysmum
    The fact that a regular saver offering 5% does not pay 5% of the total amount is irrelevant to the decision of moving money at 3% in Tesco to 5% in Nationwide.


    If the money in Tesco is all you have then any money moved gains an extra 2% pa rate for the time until maturity.


    eg £250 left in Tesco for 6 months earns 0.5 x3 % of £250=£3.75, whereas, if moved into Nationwide it earns 0.5x5%of £250=£6.25


    However,if elsewhere you have money earning less than 3% ,then use this money and leave the £3000 in Tesco (assuming the full £3000, as you are unlikely to have money earning less than 3% while there is room in the 3% account.


    The Tesco account is fine for those opening it before February 2017, as these early accounts have the 3% guarantee without the need for a named payment inwards and 3DDs.
    • teddysmum
    • By teddysmum 15th Mar 18, 12:22 PM
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    teddysmum
    Interesting points.


    Next month I will have two regular saver accounts (Nationwide and First Direct) expire, they currently feed from my Nationwide Flex direct account (5%) which is due to revert to 1% so need to better thing. The value of my regular savers is £5k in total, however with my salary going into my main account each month I will have more money to play with.
    Originally posted by Outsider_83


    Our ending offer,maturity of savers is even worse than yours.


    First TSB cut the current account interest and amount it's paid on,so the non-earning money was removed from there (3 accounts between us). Then the 5% savers (2) matured but that was soon fed into two Nationwide savers which took in up to £500/month.


    The Nationwide current accounts (3) reduced to just 1%, but the full amounts have stayed there for 1% as there is more money to juggle and the two sole accounts ensure the 5% saver.


    In the event of nothing better, we have started 2% TSB savers, but the Nationwide savers now mature, this month and a new setup will only take £250,instead of £500. Meanwhile the 60+ bonds have matured, so it's a few more Premium Bonds to make my stake equal to my husband's and the rest will go into a Tesco internet saver, in the hope of something better cropping up soon, as has been hinted.


    Other regular savers are out as the mandatory current accounts require the bugbear DDs, which we don't have spare.
    • RG2015
    • By RG2015 15th Mar 18, 12:36 PM
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    • 737 Thanks
    RG2015
    Other regular savers are out as the mandatory current accounts require the bugbear DDs, which we don't have spare.
    Originally posted by teddysmum
    There are no requirements for the First Direct current account which opens the the door to the 5% regular saver for £300 per month.

    PS The monthly funding after 6 months is not required if you open a First Direct savings account and put £1 in it.
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