The Student Room Group

UK High Interest Savings Account

Hi!!

I'm a 19 year old in university who has a lot of spare money from my SFE im wanting to invest it or put it into a high-interest savings account so that it grows over time but im not really sure where to start or not very knowledgeable about this area

does anyone have some advice on where to start or have bank recommendations? Currently i have my eye on firstdirect who has a 7% AER/gross p.a for 12 months (im assuming this is good i dont even know what this means haha)
Original post by lvnhyun
Hi!!

I'm a 19 year old in university who has a lot of spare money from my SFE im wanting to invest it or put it into a high-interest savings account so that it grows over time but im not really sure where to start or not very knowledgeable about this area

does anyone have some advice on where to start or have bank recommendations? Currently i have my eye on firstdirect who has a 7% AER/gross p.a for 12 months (im assuming this is good i dont even know what this means haha)

Hey,

Correct me if I'm wrong but the 7% saver with First Direct is a regular saver I believe? Due to the way you'll 'drip feed' a set amount into it every month, in theory the amount of interest you'll earn will be half of that advertised (so more like 3.5%) because you slowly build up the amount over the 12 months. (That might be quite confusing to get your head around - sorry!)

A couple of things to look at when picking a savings account are:
1) If it's a regular saver, check there are no penalties if you are unable to make the regular deposit every month (and also check what the minimum monthly deposit is)
2) If you're going to need the cash, or there's a chance you might, make sure you go for an easy access account so the funds are always available. If you won't need the cash then you could look to lock it away for slightly more interest but you won't be able to get to it for 6months/1 year or more depending on what you pick.

MoneySavingExpert has a good guide on the top savings accounts, which might help: https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/
Reply 2
Take a look at Coventry Building Society. Depending on how much you have and how long you can invest it for worth looking at lifetime and shares ISAs too, or even something in to a pension.
Reply 3
Original post by Zarek
Take a look at Coventry Building Society. Depending on how much you have and how long you can invest it for worth looking at lifetime and shares ISAs too, or even something in to a pension.

Thank you will have a look! I'm not too knowledgeable about investing in shares or stocks but is there something you can recommend thats a good place to start?
Chip have got a good rate for instant access.
Original post by lvnhyun
Hi!!

I'm a 19 year old in university who has a lot of spare money from my SFE im wanting to invest it or put it into a high-interest savings account so that it grows over time but im not really sure where to start or not very knowledgeable about this area

does anyone have some advice on where to start or have bank recommendations? Currently i have my eye on firstdirect who has a 7% AER/gross p.a for 12 months (im assuming this is good i dont even know what this means haha)

I recommend putting your money in a bond, if you do that put in a large sum. You won’t be able to add or withdraw from that account, but after a few years when they give you the money, the high interest of the account would have made a big difference. Hope this help :smile:
(edited 9 months ago)
Reply 6
Original post by lvnhyun
I'm a 19 year old in university who has a lot of spare money from my SFE im wanting to invest it or put it into a high-interest savings account so that it grows over time but im not really sure where to start or not very knowledgeable about this area

does anyone have some advice on where to start or have bank recommendations? Currently i have my eye on firstdirect who has a 7% AER/gross p.a for 12 months (im assuming this is good i dont even know what this means haha)


First Direct's account paying 7% is a "regular saver" account. With this type of account you're restricted to paying in a certain amount each month (with FD it's £300). And the end of the 12 months, you get the money back with the interest. Bear in mind that the interest is calculated on the daily balance (which obviously increases each month), not on the final total.

With many banks (including First Direct) regular saver accounts are only available to customers who have a current account with the bank. There are regular savings accounts available that don't require you to be an existing customer. The best way to look at regular saver accounts is to use them where you have more income than outgoings in the month -- i.e. if you can afford the regular payment each month. If you already have a lump sum available, it's probably better to put it into a higher paying normal account even if that normal account pays a little less interest.

What you need to consider is how much your "lot of spare money" is, and what plans you have over the short-to-medium term you have for it.

The advice is that, if you have savings, you need a pot of money that's easily accessible for emergencies (e.g. car breaks down, boiler breaks down, etc) -- i.e. you can get at it same-day or next-day. Instant-access accounts from mainstream banks/building societies tend to have miserable interest rates. You can get better rates with accounts that only allow a handful (maybe only two or three) withdrawals per year. There are other less well-known banks offering savings rates that are higher than the well-known brands. The top easy-access accounts seem to be paying 4.5% - 4.8%.

If you've gone more spare cash and you know you won't need it for a year or two (or longer!), you can look at fixed-rate savings products. These are typically available for one-, two-, three-, and five-year terms. They pay a fixed rate of interest, but you can't normally get your money back until the end of the term. You can currently get these paying up to 6% per year.

If your income is enough that you'll be paying tax on your savings interest, then look into cash ISAs, where interest is not taxable.

Investing in a stocks-and-shares ISA is another option. The recommendation with investments like this is that you should be investing for the longer term.

Sites I use to find accounts:

Regular Saving accounts: https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/

Other types of account: https://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html (and see the links under "ALL SAVINGS TABLES" at the top of that page for fixed-term ("fixed rate") accounts, and other types).
Reply 7
Original post by lvnhyun
Thank you will have a look! I'm not too knowledgeable about investing in shares or stocks but is there something you can recommend thats a good place to start?


I would start by getting your bank to talk you though the products they have and how they work, they probably will have Lifetime, cash and share options to choose from. You can also do some web browsing and reading eg Martin Lewis, Alvin Hall. Not to mention talking with knowledgeable friends and acquaintances. There are organisations that specifically support investment at competitive cost, try Virgin Money (High St presence, but it is Branson) or more up market Hargreave Landsdown

You can also get the services of a financial adviser, trouble is it comes with a reasonable price tag in fixed fees or a percentage of the cash invested. Banks can offer a financial adviser or perhaps better is an independent adviser that someone recommends. But for me it’s only worth it after you’ve exhausted all the free guidance you can get and if you have a large amount to invest.

Regular saving is a great habit to get in to. Putting aside as much as you can somewhere with a reasonable rate of return brings security and the ability to make larger purchase that others are having to borrow for
(edited 9 months ago)
Reply 8
Original post by Zarek
I would start by getting your bank to talk you though the products they have and how they work, they probably will have Lifetime, cash and share options to choose from.


Bear in mind that if you ask your bank, they will only be able to explain the products their bank offers; plus it's very likely that they won't be able to make a recommendation.


You can also do some web browsing and reading eg Martin Lewis, Alvin Hall. Not to mention talking with knowledgeable friends and acquaintances. There are organisations that specifically support investment at competitive cost, try Virgin Money (High St presence, but it is Branson) or more up market Hargreave Landsdown


Virgin Money is a bank, so the caveats above apply. Yes, they have a High Street presence, but they're closing 39 branches this year.
Reply 9
Original post by martin7
Virgin Money is a bank, so the caveats above apply. Yes, they have a High Street presence, but they're closing 39 branches this year.


Yes, thankfully Bransons evil empire is in decline. Mind you, he was pioneer in tracker products
Reply 10
Original post by lvnhyun
Thank you will have a look! I'm not too knowledgeable about investing in shares or stocks but is there something you can recommend thats a good place to start?


Something new, National Savings (NSI) 1 Year fixed bond looking good at 6.2%, if you can afford to tie cash up for a year. Martin Lewis saying don’t miss out..

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