Looking to sort out my finances, need advice.

Lungboy · 4 July 2013 at 2:44PM

I have an ISA with Santander that has just lost its 12 month bonus, and I was going to simply dump the money into another ISA and leave it at that, but I started reading about Regular Savers and drip feeding and now I'm not sure what the best way to go is to fully maximise my available and future finances so I'm in need of help.

I currently have:
A Barclays Graduate Additions current account, it appears to pay no interest and costs me £7 a month for various things like phone insurance, which I use, and other things which I don't.
A Barclays "Instant Cash" account. This was created when my Woolwich account was moved to Barclays several years back. It has a balance of 1p and I was going to close it. It pays 0.1% gross interest.
A Santander ISA with a low interest rate having just dropped after 12 months. Balance is a little over £2K after withdrawing from full to pay for my wedding.
I have no outstanding overdraft, and a student loan of about £13k that I'm about to defer again.

My income is currently minimal, as I work at a University but only when there are students to teach. Over the summer break I get nothing official, and live off the occasional bit of marking or whatever that I can get. However, on the horizon is a proper contracted job that will allow me to start saving proper money.

With all that in mind, what should I do?
1) Transfer my ISA, fill it up with the full allowance for this year and leave it at that.
2) Transfer my ISA but open a new one with higher interest rate and fill that one up, then leave it at that.
3) Swap my current account to a better one, plus 1 or 2 depending which is the best option.
4) Swap my current account, create a regular saver account, fill the saver from the current and also go for 1 or 2 as well.

I have a feeling #4 is the correct answer, but that strikes me as a hell of a lot of financial turmoil to keep track of. If 4 is the best, then what are the best accounts to go for? I'm leaning towards going for First Direct for the lot, the current account, their ISA and a regular saver account.

Thanks to all.

NoiSeTraDer · 4 July 2013 at 3:02PM

What are your goals? To save money for a large purchase such as a house, or simply to maximise your wealth? Because interest rates are below inflation your best bet might well be to reduce the student loan to maximise wealth. But on the other hand this reduces your flexibility and options RE: buying a house or such.

Lungboy · 4 July 2013 at 3:07PM

I have no real goals as such. Wedding is done and paid for, don't need to save for anything specific, although looking at kids in the next year or 2 and a change of car might be good. I'd just like to be making the most of my money really.

I thought it was bad to pay off the student loan due to it (well, them technically, there are 6 loans) having a lower interest rate than I can get on savings. Is that not the case?

NoiSeTraDer · 4 July 2013 at 3:12PM

What's the interest rate on the loan? Usually it's at RPI which has been running higher than the 1-2% you can usually only get on most savings accounts (although if you can find higher, then that's great, although you also need to think of tax and how much that decreases the interest rate you receive).

NS&I used to have index-linked certificates which provided RPI+ a percentage. These really were the best way for savings towards paying off student debt but alas they haven't been available for some time.

Lungboy · 4 July 2013 at 3:16PM

I'll have to dig out my paperwork on the loans to check what the interest rate currently is.

psychic_teabag · 4 July 2013 at 3:21PM

Is your income high enough to pay income tax ? If not, using an ISA isn't terribly important for you right now. (Though instant-access ISAs are currently paying slighly more than non-ISAs at the moment, AFAIK.)

is your current account giving you £7pm of value ?

Nationwide are paying 5% on first £2500 in their current account. And I think you can get cashback from quidco if you switch to them. While that's not quite as much as First Direct's reg saver, you can put the whole balance in now, rather than having to drip-feed it in.

Lungboy · 4 July 2013 at 3:22PM

My income is currently not high enough to pay tax. If the new job happens, then that will be paying tax at the basic rate. Wage will be around £1700 p/m net.

Lungboy · 4 July 2013 at 3:37PM

I checked my most recent loan statement, It's increasing ~£50 a month in interest. That seems much higher than I was aware of.

NoiSeTraDer · 4 July 2013 at 11:45PM

Lungboy wrote: »

I checked my most recent loan statement, It's increasing ~£50 a month in interest. That seems much higher than I was aware of.

Yes because the loan is linked to inflation and not interest rates. Might be a good idea to move towards paying it off, then if you need to borrow in the future (e.g. car/house) at least interest rates are low.

Lungboy · 5 July 2013 at 11:06AM

Ok, so pay off the loan asap sounds like the way to go. Does the SLC allow me to pay off in big chunks when I am able?

e: to answer myself, yes, I can pay it off early. From the MSE Student Loan guide:

"Based on the maths, only those with pre-1998 loans who definitely won't need to borrow should be racing to repay their student loans."

My first loan was in 97, so I'm just in the higher interest rate (for all my loans I presume) so paying it off does seem to make sense. Thanks for the help on that!

Now, with that decided, what do people think is the best way to go for my current account? I'm leaning towards the First Direct account for the £100 bonus and access to their regular saver and ISA, but the Santander 123 account seems very tempting.

Lungboy · 5 July 2013 at 4:07PM

I'm starting to confuse myself with all the options now. If i'm paying off my student loan asap, then I doubt i'll have any money to save, so I guess I'm not really fussed by an ISA or a saver account.

There seems to be 3 main current accounts to choose from:
First Direct 1st, pays no interest but allows access to savings accounts (not really needed this year but maybe in the future)
Nationwide FlexDirect: up to £100 interest plus £70 from Quidco. Is there any point ever having more than £2500 in this account? My current account has almost that in it at the moment, so I can get the max straight away, but could go over the £2500 quickly.
Santander 123 account: 2% on likely initial deposit, 3% after a little while, plus cashback on utilities etc (I don't have any so cashback is useless for me).

From those 3, I think the FlexDirect would be best until I had considerably more than the £2500 limit (a quick calculation would suggest the 123 would need over £4k in it to give a similar amount of interest to the FlexDirect account, ignoring the Quidco money).

Another issue that has just sprung to mind, should I keep my ISA in an ISA, or should I combine it with my current account money to make an ~£4.5k lump sum for a Santander account, or should I open 2 FlexDirect accounts?

Looking to sort out my finances, need advice.

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