Money & Insurance > Guides

Jimmy’s Deals: Saving Money on Bank Accounts and ISAS

Jim McKay
Nov 27, 2015


 

We've enlisted the help of Britain's canniest man to help you save money.

 

I hate wasting money. If a bargain is to be had, I’ll go out of my way to grab it with both arms.

Just ask my long suffering wife Pat. I once made her trudge miles across town in the freezing cold to hunt down a store offering cut price Olive Oil (we saved 15 pence).

If the saying “the older you get, the wiser you get” is debatable, it is certainly true that “the older you get, the cannier you need to be”.

At 78, I have an antenna for cannies. This week, I want to talk about banking and share with you some of the tricks I’ve learnt that may just save you money.

 

Are you loyal to your bank?

If yes, you must have very considered reasons for doing so.

The older established banks are notorious for less productive interest rates and generally get hammered for poor service. Some, though, do offer incentives which might be profitable – Lloyds Gold Account offers 4% on sums up to £5000, free world travel insurance, AA membership, mobile phone insurance, Sentinel card cover and discounts on some selected services (eg hotels and restaurants) – the monthly cost (£5) is repaid to customers loyal enough to have once had free banking!

TIP: When weighing up the benefits – consider whether they are duplicating benefits held elsewhere – e.g. House Insurance policies or Car Insurance where AA/RAC membership is offered as part of the package.

 

If you are wary of the newer challenger banks – how about a Santander 123 account?

Not only does it pay 3% interest on sums up to £20,000, it also pays back a percentage on direct debit payments to councils and utilities as well as offering discounts on certain restaurants, hotels and services.

You have to pay in £500 a month – but it is easy to set up a simple instant transfer system, which allows you to control your funds constantly.

Even the recent increase in monthly charges to £5 still gives one a healthy profit. If you are canny, you will have accounts with more than one bank: indeed, you will also have more than one account with one bank – check out Lloyds Vantage account for example.

For bill payers without savings, NatWest’s new Rewards Account is an attractive option.

Spend at least £100 a month, and pay by direct debit, and NatWest will give you 3% cashback on gas & electricity, council tax, water, broadband and more.

They’ll charge you £3 a month for this perk but you can cash in rewards as soon as you’ve earned a fiver.

 

A current account I like:

TSB Classic Plus Account  - No monthly fees and 5% variable interest on balances up to £2000.

Over £2000 and the interest rate is 0%. If you go over, get onto Online banking and move some money.  

 

TIP: Whatever you do, constantly check out your accounts. Much to my wife’s displeasure, this is the last thing I do before going to sleep and the first thing I do when I wake up (I also do it after lunch and occasionally during dinner).  

If you can, keep them as exactly as possible at the maximum paying interest. Do not worry about constantly moving even small amounts of money – after all you are dealing with a computer. Difficult concept for those of us used to dealing with familiar faces on the other side of the counter! My Santander Account has paid £1100 in two years.

 

Talking of banks, are you still buying ISAs?

The government has increased the amount of money you can invest in ISAs but if you are like me, and do not dabble in equities, then the interest rates on ISAs are so paltry that the basic rate taxpayer is better off investing in normal savings than in ISAs: this will be especially true when the new regulations about how much interest you can earn tax-free comes into effect.

 

What are the changes?

From April 2016, basic-rate taxpayers will be able to earn £1,000 interest a year without having to pay tax.

 

TIP: Invest in the savings account giving the highest rate but do get your calculator out. Tying up a few thousand for an extra 0.5% may be a false economy.

 

A savings account I like:

Paragon Bank: Limited Edition Easy Access – 1.46% variable rate with unlimited withdrawals and no penalties.  

 

I’m signing off for this week. Next time we’ll be tackling holidays.

Take care of yourself and don’t settle for anything less than the best deal.

 

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