Where to put my small pot of money?.

Bookowl wrote: »

Had a look at the tsb classic account, don’t know how comfortable I feel about putting £500 in every month and then taking it out again, surely they’d notice if I cycled money in and out of the account?
With the Nationwide flex direct would you recommend I move the small pot of money to the Nationwide flex direct account and dd it to the tsb account monthly?
Sorry for all the questions, it’s a mind field to me.

The TSB Classic doesn't pay any interest, it's the Classic Plus you need for 3% interest on £1,500. Direct Debits are only required if you want to get the £5 cashback they offer for paying out 2 direct debits until 31 December. (Or for any switching incentive if they offer one at the time you apply.)

Most users here cycle money as you describe without issue. If they look at the account they will of course notice, but it isn't breaking any rules and you aren't going to be cycling huge amounts of money for it to be flagged up as potentially fraudulent.

You could get the Nationwide FlexDirect and the TSB Classic Plus and set up two standing orders, for the same day, one to the other both for £1,000. That way the only manual admin required is moving the interest from each account. With £2,500 in the FlexDirect at all times and £1,500 in the TSB at all times, you wouldn't earn interest on the interest unless you moved it elsewhere.

On Help to Buy ISA's vs the LISA

- With the Help to Buy ISA you can withdraw the money at any time for any reason without penalty, you just wouldn't get the bonus; with the LISA there is a 25% penalty for taking money out if you are not 60 or buying your first home (this returns the government bonus and leaves you with an additional loss of 6.25%.) The only other circumstance for a penalty free withdrawal is if you are terminally ill.

- A LISA has to have been open for a year before you can use it to buy a property; with the HTB you need to have £1,600 saved in it before you can use it to get the bonus and buy a property (as you can put in £1,200 on opening, this can be done much more quickly.)

- You can pay into both a LISA and a HTB, but you can only use the bonus from one to buy a property and you can only transfer the HTB into a LISA in the current tax year.

- The maximum government bonus on the HTB is £3,000, with the LISA you continue getting it on contributions you make until you're 50.

You have to be under 40 to open a LISA, so you may like to open one with £1 to keep the option open if you are nearing that age. It would also start the one year clock counting down.

Bookowl wrote: »

Had a look at the tsb classic account, don’t know how comfortable I feel about putting £500 in every month and then taking it out again, surely they’d notice if I cycled money in and out of the account?

Yes, that's what current accounts are for.
A long time ago now, I had to open my second Lloyds Vantage account (gone now - they paid interest on up to £5000 if £1000 was paid in each month and you could have three accounts). I said the purpose was saving, he said you'll be just moving the £1000 in and out then? or words to that effect. They know it happens, and accept it in the hope of selling other stuff to you, and to the other customers take the offer at face value and who do pay their salary in and bills out.

Bookowl wrote: »

With the Nationwide flex direct would you recommend I move the small pot of money to the Nationwide flex direct account and dd it to the tsb account monthly?
Sorry for all the questions, it’s a mind field to me.

Not Direct Debits, Standing Orders.
But no, don't put it all in one account and move a bit each month to another account.

Initially spread it among the accounts so there's enough in each that you get the maximum interest available, but no more (except very temporarily).
FlexDirect and Classic Plus take £4000 between them, and another £250 for the first month's RS. The rest of your small pot needs to go elsewhere, such as a LISA, or other suggested accounts.

Then feed £250 a month into the Flexclusive Regular saver by standing order from the FlexDirect.
Pay £1000 a month to the Flex Direct from TSB Classic Plus. Move £758 a month (or thereabouts, depending on the interest) from FlexDirect to Classic Plus, either by Standing order or Faster Payment.
Pay your £30/40 into the Classic Plus as you get it.
The balance in the Plus will reduce by around £120 a month, so should just about last. You could top it up if you have money available elsewhere at a lower interest rate. When the balance gets near to £1000 switch to moving £250 a week - you don't want to go overdrawn while bouncing the money around.

Review the other answers, and be sure you know what you're going to do. It's actually quite easy and lots of the contributors to this board do it, often with many accounts.