Since returning to employment two and a half years ago, my financial situation has (naturally) improved quite a bit and as such, barring my student loan, I don’t have any outstanding debts – both my overdraft and credit card are clear. Not only that, but I have enough left over at the end of most months top put a three-figure sum away in savings.
Until recently I’ve had two savings accounts. One was with National Savings and Investments, and is one that I’ve had since I turned 11 when I started getting cheques in my name as birthday presents and needed somewhere to put them; it also has a chunk of money saved for me by my late grandmother which I received when I turned 21. At its peak it had over £2500 in it, but it’s dropped down to £1400 after I pillaged it when I was unemployed in 2009. Whilst it originally had quite a good interest rate, it’s now dropped to 0.30% AER, which is less than the Bank of England base rate of 0.5%.
The second was with the Halifax, where I also have my current account, and was a web-only account which I opened last year once I started having enough money to put aside to save regularly. It’s now got over £1000 in it; when I opened it, the interest rate was 3.0% AER although it’s dropped to 2.3% – not great but still respectable. Access is restricted to one penalty-free withdrawal a year; any more will result in no interest being accrued for that month.
So, I’m keeping the second account, but the NS&I account needs to go – the interest rate is stupidly low. I also haven’t opened an ISA, which pays interest tax-free. Taking this into account, I opened an ISA with the Halifax which pays an introductory rate of 2.6% AER for 12 months – but this means that next year that drops back to 0.1%, so I’ll need to close the account and move the money elsewhere (probably into my other Halifax savings account). The main advantage with sticking with the Halifax is that I can manage it alongside my existing accounts online, and can move money between accounts instantly if I have to. Better rates are available elsewhere, especially if I were to lock the money away, but I’d rather have it on hand for a rainy day if necessary.
Conveniently I also received a tax refund from HM Revenue & Customs – a three-figure sum – so that’s going to sit in the ISA as well.
I’m hoping, now I have a fair amount of money in a place where I can actually gain interest, that I’ll have a bit of free extra cash soon. At some point Christine and I will want to buy a house, rather than forking out for rent every month, so we need to get some cash together for a mortgage deposit. With the economic climate still being rubbish, saving is a little difficult but hopefully there will be some returns on it.
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September 22, 2011 at 17:21
With regards to your Halifax ISA, I was told by a member of staff at my branch that I all I have to do to get the new interest rate on my cash ISA is to call up and ask for it to be changed (this was after unsuccessfully attempting to start a new ISA and transfer funds across).
It’s annoying that your own bank treat you like this rather than keeping you on a deal that will benefit you, but I guess that’s just the way it goes now!