To ask where you would save £7000?

[gembran]

Have taken an interest-free loan (long story) and would appreciate advice re. where to save it!

Currently thinking premium bondsx

You save your loan?? Am I missing something? Unless the interest rate is considerably more than the APR on the loan, why?

I save my money, I dont borrow to save

Doh! Just read OP PROPERLY!! its an interest-free loan!!

Right, ISA?

We put ours in premium bonds ATM. Rubbish rates everywhere.

Stocks and shares ISA? How long is the loan for, when will you need it?

You're not going to get a great rate on £7k....... Maybe 1% in an ISA? Or your own bank might offer a higher promotional rate if you meet specific conditions?

Santander 123 current account pays 1.5% which is better than a lot of savings accounts.
But why are you doing it? Surely you will have to start paying back the loan, even if it is interest free???

Fixed term savings accounts often good. What is the term of the loan? Stocks and shares not likely to give a good return in the short term. Do you need it to be accessible quickly or not?

It's a salary based loan, so instalments will be taken out of my salary over 2 years. I was thinking an ISA but have already invested the max this year into one.

Am now thinking £5k into premium bonds (as these are fairly accessible) and £2k an instantly accessible savings account with my bank.

Thanks for the advice!

Look on moneysavingexpert for interest paying current accounts.

You can get 5% on up to £2K with TSB and 4% on up to £5K with Lloyds but you will need to move a couple of direct debits to Lloyds and set up a standing order to meet funding requirements - just move money in and out of your current account or other savings.

I was about to say there is details of doing this on the moneysavingexpert site. . Regular saver are good interest rates I think, but you can only save so much per month. Just make sure you pay it all back before 0% interest thing runs out

Barbara - I don't know if it's still the case, but Nationwide had a current account that paid 4-5% on anything up to 2.5k. You'd still need to save the rest elsewhere though and I have no idea whether any savings accounts are giving good interest at the moment.

Open a couple of regular saver accounts that offer 5-6% on up to £250 a month. If you can handle the risk then FTSE 100 based funds are a great buy now with a falling £. Go to Hargreaves Lansdown and check out their top 150 funds.

We have premium bonds and get the odd win of £25. We took most of it and overpaid the mortgage.

Checkout the cash back sites as some accounts will give money on opening.

Trouble is with anything paying over 1% is that there are so many hoops to jump through it becomes hard work, or you have to lock it away (fixed term bond).
tbh, you might be as well to put it into premium bonds with the interest rates being as rubbish as they are.

NS&I Direct Saver. Online, instant access paying 0.8% and government backed so 100% secured.

For safe and easy access, HSBC were doing a cash isa with a 'reasonable' rate (but only when compared with similar) but interest rates are so rubbish, I'd probably put the whole lot in premium bonds, then once it's safely paid off, try a long term investment (I'm assuming the money will be long term savings?)

The building society interest on the account I'm saving into every month for my son has dropped to 0.8% so I'm going to take most of it out and buy five year national savings bonds at 2.5% interest. It's a gamble that he won't need the money before then, also i can't remember if they're for children only.

If you're happy to tie it up for a long time then why not put it in your pension? You will get tax relief at least 20% so will get a 20% 'bonus' on that amount immediately which is a pretty good deal plus whatever your investment gains in value. If you're a higher rate tax payer you can claim an additional 20% back in your tax return.

Trouble is with anything paying over 1% is that there are so many hoops to jump through it becomes hard work, or you have to lock it away

. All the interest paying current accounts can be easily opened online in about a minute.

Tesco current account pays 3% on up to £3k with no pay in, lock in or Direct Debit requirements.

There are a couple of other accounts where the only requirement is to pay a certain amount in each month. This can be done by setting up a couple of reciprocal standing orders, again which takes minutes online.

You can also open a Tesco savings account that can be paid in by Direct Debit, which can be used to satisfy the DD requirements. Several other DDs (eg TV licence) can be changed online in seconds.

The above is explained in detail on MSE and a few minutes work can increase the amount of interest earned by hundreds of pounds a year, so well worth it and not hard work at all.