Until earlier this year, for various reasons, I’d ended up with four different savings accounts, all with the same bank.
My current account is with the Halifax bank. It always has been, ever since I got my first account aged 18, and I’ve stayed with them as they pay a £5 reward into your account every month, provided that you don’t go overdrawn and pay in at least £750 per month.
In my first year at university, I also set up an online savings account, where I could store some money at a higher interest rate where I had a surplus. As it was managed online using the same system as my current account, I could move money between accounts easily and instantly.
Over time, the interest rate on that savings account got progressively worse, so I set up another web-based account with a better rate of interest, also with the Halifax. Unfortunately, at the time, the Halifax wouldn’t let me close the old account online, or have a zero balance, so it stayed open with about £5 left in it. Mainly because I couldn’t be bothered writing to the Halifax by post to ask them to close it.
Once again, that account also ended up not paying a particularly good rate of interest, so I set up an Individual Savings Account, or ISA. These permit you to save money without paying tax on the interest, but the maximum balance is capped – at the time, this was around £5000. This became my main savings account, but again, I couldn’t easily close the other two accounts.
When Christine and I got married two years ago, my parents gave us a large sum of money as a wedding present, which was to be used as a mortgage deposit for a house. This was more than £5000, so it couldn’t go into my ISA, and neither of my web-based accounts were offering very good interest rates, so I set up a fourth savings account – an Everyday Saver. This came with an ATM card and, at the time of opening, paid 1.5% AER interest. More importantly, this interest was paid monthly, so as and when we were ready to buy a house, we could withdraw all of the money and accumulated interest.
As we’ve now bought a house, all of the money from my savings has gone towards the mortgage and associated conveyancing fees, so having four savings accounts with no money between them would be a bit ridiculous. Thankfully, the Halifax recently enabled a feature in their online banking system to close unneeded savings accounts. So I have now closed all my savings accounts, apart from my ISA, which I’ve also converted to a slightly better product. It only pays 0.8% AER for 12 months, and then 0.5% AER afterwards, but there are few easy-access ISA accounts out there that pay much more. The Bank of England base rate has been static at 0.5% for over six years now, from a high of 5.5% in December 2007. Unless that goes up, I can’t see interest rates on savings going up any time soon.
In any case, we’re now borrowers rather than savers. Our main focus will be to pay off our mortgage over the next 25 years, although I will be setting some money aside to rebuild my savings a bit, so that there’s some money for emergencies or big purchases. And I’m pleased to have just one savings account to deal with from now on, even if it does only give a low return.