You don't need to be an 'investor' to invest in Singletrack: 6 days left: 95% of target - Find out more
my lads just asked me if ive heard of chase bank as he thinks they do some sort of 2.5% refund type thing. he plans to leave at least a grand in there and his mates told him that he just leaves a grand in there himself and gets £25 per month from it.
my lads got a s&s ISA that he put a grand in a couple of years ago and at the moment i think its about +£200, and probably a bit more faff to withdraw if needed (maybe a good thing?). so..... he thinks if he sticks it in a current acc like chase then he'd get a better return on it and be easier to do withdrawals.
is he right? or is he missing some tax implications that mean its not quite that simple?
his wish is to put a grand in now, then build up to maybe 4 or 5 grand, and just get regular monthly cashback so he can see it growing, and be easy to make withdrawals for emergencies. he'd plan on replacing those withdrawals as soon as poss.
what's his best option do you think?
thanks
Kroo are paying 3% interest on the current account, fully FSCS backed as well.
Was easy to open online via App and card came within two days.
Was the best current account rate on MSE last week.
his mates told him that he just leaves a grand in there himself and gets £25 per month from it
His mate is a fantasist. And not great at maths.
I believe Nationwide's got a current account that'll give you 5% on the balance up to £2500, or at least they used to. Get him to check on MSE, that'll probably put him right. Don't do it for him, he's going to have to learn to sort his own money out himself sooner or later.
One of mine runs auto round up / savings - and has gathered a good few hundred quid.
Ours also use Starling, so easy to create a couple of 'pots' and auto transfer money into them, bung an extra few quid when you have it in there. One always saves his tips from work into that and has over £1k in there now...
https://www.moneysavingexpert.com/savings/auto-saving-apps/
Might get £25 a year. If you can get me one that gives me £25 per month on £1000 I've got £30K I can put in it straight away, and would return me £9000 a year before i consider the compounding.
Best right now (as i'm sadly doing) is an offset mortgage so my savings are reducing my interest by base +0.99% a year, but of course that's not an option for everyone.
Having had a look through MoneySavingExpert, I recently opened a Santander Edge account. They've recently updated it so you can get £200 if you switch accounts, you then get up to 1% cashback up to £10 on bills and 1% up to £10 on household spending, but you can also then open an Edge Saver account on which you get 4% interest on balances up to £4k.
As above, I also use Revolut and have set up a Vault with spare change round up, you can save fairly easily with that if you're disciplined.
my lads just asked me if ive heard of chase bank as he thinks they do some sort of 2.5% refund type thing. he plans to leave at least a grand in there and his mates told him that he just leaves a grand in there himself and gets £25 per month from it.
This is wholeheartedly 100% incorrect.
So i actually work for a part of Chase bank but not for the retail side, Chase dont offer a 2.5% refund of any sort and your lads mate is talking horse manure.
Is what is actually offered is a normal current account that offers 1% cashback for 12 months on all spending, an instant access savings account which is currently offering 2.7%, and a round up service that offers 5% interest on your round up basis.
Round up is when you spend £1.60 in a shop it rounds the amount to the nearest whole pound and puts it into a different account, in this instance it would be 40p moved over.
As above MSE website has a comparison to filter to your needs.
We use https://www.marcus.co.uk/uk/en/savings/online-savings-account
and just move spare money to/from as and when. Takes about 30secs to shift between that and a different bank's current account via their Apps.
Currently 2.25% AER/ 2.22% gross (variable)
TSB do a monthly saver that's paying 5%, you can only put £250 a month in though.
Not a current account, but you easily access it if needed.
TSB do a monthly saver that’s paying 5%, you can only put £250 a month in though.
Not a current account, but you easily access it if needed.
I think you have to have a Nationwide current account to get the regular saver.
thanks. i'll pass this onto him.
would you agree then that one of these options above would be better for him than his ISA, considering he wants easy access at the same time as saving?
cheers
would be better for him than his ISA
Unless hes expecting to make more than £1,000 in interest a year theres little point in an ISA
(the rules changed several years ago)
Shop around for savings accounts, as you'll get 2.5-3%
Plus if its in a separate account its easier not to dip into than it just being in his current account.
Barclays have a 'rainy day saver' account if you're a blue rewards member which gives 5% on up to 5k, then I've got a savings pot with Monzo for the rest of my savings which is 2.5% currently (2.4% is available at the moment).
I think the most important lesson you can teach him is how to invest properly and that "savings accounts" and "current accounts" are the best way to LOSE money.
Inflation is currently running at 10%. Even if at 3% interest he gets £25 "growth" regularly he's getting POORER.
If he wants to save, then he should stick it in an ISA, buy an index tracker and then leave it there for at least 5 years.
A current account is what should be used for day-to-day. Anything over and above that should be invested, not "saved". You can still get access to funds in an ISA is you absolutely need to - but their value will fluctuate, may go down, but will go up over the long term.
Interest paid on savings hasn't exceeded inflation for a long long time. It's a recipe for relative poverty. If you're not beating inflation then you're getting poorer.
7% regular saver (£300per month) via First Direct is the best I could find of that sort of thing.
They were offering cashback for a switch as well but that's usually only when putting in a certain amount a month & paying several DDs which he may not meet.
On the S&S ISA, it's probably now below where it was a year ago as last year was pretty poor for the stock market.
Most of the index funds I looked at were down 5-10% Jan 22 - Jan 23. Can't predict the market but taking it out after a decline is usually not the best way to accumulate money.
I'd take a look more closely at that, but the ISA wrapper won't be doing anything until there is more added. Withdrawing is usually as easy as any other account (better than many high interest accounts due to penalties etc) but the risk is that you are forced to withdraw money after a big dip in value.
My Chase account is really good. I have a savings account and a normal account. The normal account rounds up into the savings account, so far this year it has rounded up £27.53 into the savings account. The savings account is 3%. The rounded up bit is at 5%. I also get 1% cash back on all debit card payments.
I’m using this as my main cash account and I’m getting about £60 a month across all three of those.
the risk is that you are forced to withdraw money after a big dip in value
Don't withdraw it?
Had this sort of problem with my o/h's dad's pension. He had set himself a date when he wanted to retire - and it was not long after the 2008 crash. He was happy and had an easy job, so I told him to stay in for another 12 months - at which point it had recovered. (It was a 17 month recovery from that crash).
He didn't, and moans constantly about how big his pension is, when it would have been at least 50% bigger if he'd just waited a bit.
People really need to think and understand about savings and investments and accept reality, rather than wish it was different.
How about something like a Plum account as well as the normal bank account?
It ties into your current account & skims off money based on your spending habits. You can set it to how aggressively it does this, or even turn it off for a while. It does a similar thing as mentioned above like round-up purchased to the nearest pound & saves the difference.
You can choose to have the savings in a regular saving account, or also set-up a cash or shares ISA that the money goes into.
I keep meaning to set one up and never get round to it.
Don’t withdraw it?
Well obviously if that is an option, but read the OP. Their requirement is "and be easy to make withdrawals for emergencies", hence me mentioning it.
Yeah - for emergencies.
There's a "buffer" - for emergencies. Yep, that's fine for a certain amount of cash.
But the post reads like it's a savings account for long-term benefit - which is a lie. Inflation ensures that. And that's what I think needs pointing out.
1) Current account - day to day only.
2) Buffer savings - for emergencies
3) Everything else - invested for the long term. (Preferably as a pension in the first place as you make 20% just for sticking it in there against tax)
I have a chase account. I have a variety of savings account.
I have my old current account that I've had for ages with some sentimental attachment (daft I know). I transfer cash to my chase slush fund saver which acts as a savings account for day to day spending, this moves to my current account for spending with rewards.
I quite like the chase account for day to day. I also have other avenues of investing /saving IANAIFA