Question about current/saving accounts

quicksort · 13 Jul 2008 at 10:52

I currently have a student account with Natwest which I think is a normal current account. I have few thousand pounds in there which is just sitting there and is not going to get spent anytime soon.

Would it be a good idea to open some kind of savings account and transfer the money over? - is this going to pay a significantly higher interest rate than the student account? ( I already have an ISA open)

gillywibble · 13 Jul 2008 at 10:59

Yes and yes.

Ugiol · 13 Jul 2008 at 11:00

Very good idea, you hardly earn any interent on current accounts, if any. With inflation increasing it's only sensible to put it into a savings account otherwise your money will lose value.
As for what type of saving account to go for, choose one which offers some flexibility whilst earning as much interest as possible since you are a student.

meghatronic · 13 Jul 2008 at 11:08

If you have your ISA open, and haven't used your tax-year allowance MY GOD man move your funds into it asap!

quicksort · 13 Jul 2008 at 11:09

I haven't moved funds over yet. Is it better to stick with the Natwest ISA or should I look around for better interest rates?

weringo · 13 Jul 2008 at 11:11

Natwest rates are decent but currently the best are found at Barclays. Ask yourself is it worth the hassle opening a new account for an extra ~1%.

http://www.moneysupermarket.com/savings/

meghatronic · 13 Jul 2008 at 11:12

quicksort said:
I haven't moved funds over yet. Is it better to stick with the Natwest ISA or should I look around for better interest rates?

Depends. There e-ISA is 5.50%.

HSBC 6.25%

I think I'm on 6.5% with nsandi, but that's an offer running out soon. There current rate is 5.30%.

cf. http://www.moneysupermarket.com/isa/BestBuysResults.asp

quicksort · 13 Jul 2008 at 11:16

I'm looking at the Natwest e-saving account which pays 4.3%. I start a job soon so would it be a good idea to open an e-saving account and then get my salary paid into this account?

This is an online account so what drawbacks does that hold?

Energize · 13 Jul 2008 at 11:20

Kaupthing Edge does 6.5% online, and Birmingham Midshires does 7.11% fixed. You can't get your wages paid into a savings account, they need to be moved from a current account to it.

Icesave have the best ISA that accepts transfers in at 6.1%, Alliance and Leicester are the best UK bank at 6%.

Alliance and Leciester also do a monthly savings account at 12% gross.

Rebelius · 13 Jul 2008 at 11:23

If I were you I'd apply for a nice big interest free overdraft for your current account and then open an online savings account like the Kaupthing Edge one (6.5% but you have to pay tax if your income is over £5300 odd in the year) then stick as much money as you can in that and have your current account as far in the negative as possible.

My free overdraft limit is -2750, so I usually keep my current account balance around -2250 and stick anything else in the savings.

I also do most of my spending on credit cards and then move the money into the savings account until the bill needs paid.

quicksort · 13 Jul 2008 at 11:27

Are there any drawbacks with these "online" accounts such as the natwest one? What makes them different from normal bank accounts (such that they pay far higher interest rates)

Energize · 13 Jul 2008 at 11:28

quicksort said:
Are there any drawbacks with these "online" accounts such as the natwest one?

None that I know of.

weringo · 13 Jul 2008 at 11:29

quicksort said:
Are there any drawbacks with these "online" accounts such as the natwest one? What makes them different from normal bank accounts (such that they pay far higher interest rates)

You can't make payments/set up Direct Debits/standing orders etc.

You're limited to withdrawing, depositing and transfering your money to your other accounts.

quicksort · 13 Jul 2008 at 11:31

Can I still use it as the account that my salary gets paid into?

weringo · 13 Jul 2008 at 11:34

No but you can have your salary paid into your current account and have it immediately transfered to your ISA.