Here it is! Our first blog post on the new website... We've removed all our posts from the old blog but will be slowly re-reviewing them, updating them and reposting them in the future!
One of the best ways to currently maximise the interest you earn is via current accounts and their linked regular savers, some of which offer up to 5% in interest.
Savings accounts and fixed term bonds are way behind and often don’t come with a current account’s flexibility. This page shows a number of ways you can use an extra direct debit to help you maximise your interest.
If you have any questions on the below, as always feel free to email us at email@example.com
Meet Simon. He's been saving up for a new car and currently has £5,000 in his bank account which pays him interest of 0.5%, equivalent to £25 a year.
Simon wants to switch to an account with Bank A which pays 4% but only if he has two paying Direct Debits. Unfortunately, he only has one Direct Debit.
However, by using a cheap Direct Debit that hypothetically only costs £1 a month, he can earn
£188 in interest a year, £150 a year more than before!
Meet Jess. She already has 4 Direct Debits in her main current account and wants to set up the same account as Simon and deposit it £5,000. She will earn 4% in interest a year as long as she has two paying Direct Debits a month.
Jess feels moving the existing Direct Debits will be too much hassle and she'll have to make sure there’s enough money in the account every month to pay the bill.
However, by using 2 cheap Direct Debits that hypothetically only cost £1 a month each, Jess can keep all of her existing Direct Debits in her main account and set up as many new Direct Debits as she needs in the new account at £1/month in order to earn an extra £176 in annual interest.
Meet Natalie. She wants to set up a regular saver depositing £400 a month and earning 5% but the bank requires her to first have a current account with at least 2 Direct Debits going out a month.
She doesn't want to move any of her existing Direct Debits so sets up two cheap £1 Direct Debits on the current account. Natalie can now open a regular saver with the Bank and earn an extra £87.50 a year interest.
Most current accounts also require you to have a certain amount of money coming into the account every month before you qualify for the higher interest rate.
To fulfill this requirement you can simply set up 2 Standing Orders across two of your own accounts using internet/telephone banking:
Standing Order 1: From Bank A to Bank B for the minimum monthly requirement.
Standing Order 2: From Bank B to Bank A for the same amount 5 days later (this takes into account delays in payment/weekends).
Always ensure you have enough money in Bank A to transfer out and the two payment dates fall within the same month. Going into your overdraft on either account will erase any returns you hope to gain!
I hope you liked our first blog post on the new website and were able to learn something you can action with relatively little effort. As always, feel free to send us some feedback!