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Santander 1|2|3 v The Rest - for individual savers

2 November 2016

Stacking CoinsComparison for the Individual Saver
We've previously shown this comparison for a couple with £20,000 savings. But we've had requests saying 'Hey what about the individual saver?'. So we're doing the same comparison but this time for an individual with the same £20,000 savings. As savvy savers, I am sure you will be aware of the cuts and impending cuts to the interest rates of some of the most popular current accounts. But they are still the best safe place to keep your savings. Santander's cuts are already in effect, from 2.96% Gross to 1.49%. While TSB's cuts, from 4.89% Gross to 2.96%, start on 4 January.

So, let's see how the numbers will stack up from 4 January 2017;

Option One:
Putting all £20,000 in 1 Santander account;

Santander 1|2|3 current account pays 1.49% gross interest on £20,000 = £298 interest per year.
You have to pay £5 a month compulsory fee, so that's -£60 a year.
That brings your returns down to £238, which means a truer interest rate of 1.19% Gross.

Option Two:
By 'spreading' that £20,000 around, you could have;

(2x £5,000) Bank of Scotland Current Accounts with Vantage paying 2.96% Gross interest on £10,000 = £296 interest per year,
(2x £3,000) Tesco Bank Accounts paying 2.96% Gross interest on £6,000 = £177.60 interest per year.
(1x) Nationwide FlexDirect Account paying 4.89% Gross interest on £2,500 = £122.25 interest per year.
(1x) TSB Classic Plus Account paying 2.96% Gross interest on £1,500 = £44.40 interest per year.
The total interest when spread over these 6 accounts = £640.25, which is an average interest rate of approx 3.2% and £402.25 more interest than lumping it all in one Santander 1|2|3 account.

With either option you will need to set up Direct Debits, as this is a condition for both the Santander 1|2|3 which requires 2, & Bank of Scotland Vantage which requires 4, that's 2 for each account. You'll also need to meet minimum monthly payments (except Tesco where no minimum payment is required). For the Santander option it's £500, and for the 2nd 'spreading' option it varies between £500 & £1000, dependant on the Bank. But that can also be done with £500 and move it around, multiple times when required, by setting up standing orders between the different banks and accounts. Worth the extra effort for over £400 more interest.

If you've got different requirements let us know and we'll find the best options currently available to you.

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