Where's the best place for short term savings?

[Jemster]

I'm 40 this year and want to save some money each month for a special holiday we're going on later in the year. I don't want to save to my Barclays savings account as it is all too easy to dip in to the money with online banking. I want something separate to Barclays but that I can access at short notice.

Should I just look for a regular savings account or an ISA?

neither if you want more than pennies of interest.

current accounts pay 3,4 or 5 per cent with some time spent setting up standing orders.

you will need the self-control not to spend it but I'm sure you can manage that as an adult.

I'd look at an ISA. You're not going to get much interest unfortunately but at least it won't attract any tax. If you have a look on comparison sites for instant access ISAs you should find a few options.

Or have a look at Moneysavingexpert.com. There are accounts known as Regular Savers in which you must deposit the same amount per month by direct debit, Leeds building society have one paying 3.05%. You can make 1 withdrawal and get the full rate or more than one withdrawal and get a slightly lower (but still better than most) rate.

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Piggy-backing on to this thread as I have a question re saving...

I want to start saving this year and noticed that current accounts have some quite high interest rates atm (high for the current market!).

So if I get one of those accounts that pays 5% AER (eg www.nationwide.co.uk/products/current-accounts/landing-page/flexdirect ) can I just lump in the amount up to which I get the 5%, so £2,500 for the NW account, then just "pass" the required amount through the account each month? So I'd effectively get the max interest I could each month?

Does this sound correct and a sensible way to save?

I want to have instant access to my money as we have a few things planned this year, so a no access savings account doesn't work for me.

Thanks

yes, that's how thousands of people are doing it. You have two accounts and you shift the money back and forth through standing order.

I think there are about 24 separate current accounts at the moment that pay 'reasonable' interest. Stack them up for the money you have, set up the standing orders and any direct debits required, and away you go.

note the Nationwide account only lasts for a year but that sounds enough for you. TSB also do 5% accounts, £2k each.

this is the only way to get interest above inflation at the moment.

I have 5 of these high interest earning current accounts, the same £500 makes its way from one to the other to the other each month and one has a few DDs. takes some time to set up but worth it.

Thanks I was thinking more about this last night, and I think I'm gonna get the nationwide one plus a TSB one (I assume you aren't allowed both the TSB accounts?) and set up the standing order to pass £1k between the two each month.

I already bank with santander and they are pushing me to get their 1-2-3 account which I wasn't initially keen on, but it appears it pays 3%aer for balances over £3k which isn't too bad at all, so when I go in to chat to them I'll let them persuade me

I did some maths last night and the amount you can get back in a year as interest isn't too shabby!!

you may still be able to get two TSB classic plus accounts.

Santander also does cashback on bills, so set up your council tax and bills to come from it. This will easily pay the £2 a month fee. If you have a mortgage, pay that from it too!