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Santander 1|2|3 v The Rest

July 2016

Piggybanks around a stack of coinsWhich Current Accounts pay the most interest?
So, you and your partner have £20,000 in savings between you. The easy option is Santander, after all you could make 2.96% Gross interest on the full £20,000 by just having one single Current Account.
But hold on, you could be missing out on £100's. With a little bit of effort and spreading that £20,000 around several different providers you could make a lot more interest.

Let's have a look at the figures;

Santander 1|2|3 current account pays 2.96% interest on £20,000 = £592 interest per year. You have to pay £5 a month compulsory fee, so that's £60 a year.
That brings the interest down to £532, which means a truer interest rate of 2.66% Gross.

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

3x (1 account each & 1 joint) TSB Classic Plus Accounts paying 4.89% interest on £6,000 = £293.40 interest per year.
3x (1 account each & 1 joint) Nationwide FlexDirect Accounts paying 4.89% interest on £7,500 = £366.75 interest per year.
1x Club Lloyds Account paying 3.93% Gross interest on £5,000 = £196.50 interest per year,
and the final £1,500 in a Tesco Bank Account paying 2.96% Gross interest = £44.40 interest per year.
The total interest when spread over these 8 accounts = £901.05, which is an average interest rate of 4.5% and a whopping £369.05 more interest than lumping it all in one Santander 1|2|3 account.

Both options require you to set up 2 Direct Debits, as this is a condition for both the Santander & Lloyds Accounts. You'll also need to meet minimum monthly payments (except Tesco where no minimum payment is required). For Santander it's £500, and for the 2nd 'spreading' option it varies between £500 & £1500, 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. But once done, that little bit of effort really does pay off!

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