Am I being ripped off by my bank?

[FlamedToACrisp]

I'm not good with money, but it's never been a problem so far as I haven't had any!

Temporarily, I have a lot of money, following an inheritance. We plan to use it to build an extension, so we need easy access, but not for a few months/maybe a year, as we haven't even drawn up plans or got planning permission yet, and anyway we are still isolating.

I have £39K in an ISA, on 0.01%, and £33K in a savings account on 0.10%. (I put £20K in the ISA last tax year and £19K in after the start of this tax year.)

I just did an online interest calculator and it reckoned I would get almost nothing - about £36 a year on the savings account account and £3 a year on the ISA. But that can't be right, can it? These are huge sums of money - well, they are to me - and surely I must get more in an ISA than a savings account? I thought it was meant to save you tax, but if I only get £3 the tax is hardly a consideration! I don't pay income tax as I don't work, only get carer's allowance, and DH is a pensioner.

I have no ID so can't open a new building society account. I might have a Santander account but I'm not sure where the paperwork is. My DH has ID and Nationwide and Lloyds accounts - he could put it in these or open others if we would get much more and I'd rather it stayed in my name tbh as he is quite frail.

Am I just being greedy/unrealistic or is my bank offering piss-poor interest rates? Should I take it out of the ISA and put it in the savings a/c?

What would you do?

You could have a joint account. You say your dh is frail and if anything should happen to him the money in a joint account becomes yours.

Banks often give less interest than building societies. At least that used to be true, however, interest has taken a nose dive recently and you are allowed to earn £1,000 interest, so ISA’s may not always be the best option.

I would put it all in Premium Bonds - interest rates work out at 1.4% and quite possibly more if you have good luck.

£50,000 is maximum holdings for one account.

Check out www.nsandi.com/

Interest rates have all fallen massively due to the coronavirus, so I don't think it's just your bank.

Interest rates are at a historic low. Great if you’ve got a mortgage, shit if you’ve got money to save. Slightly concerning that you have no ID and a frail partner. If anything happened to him, you would need ID to sort out his affairs.

Interest rates have dropped dramatically. I've had to spend all my savings thanks to COVID but my interest rate on that account had gone down to 0.25%

Those interest amounts are right. 0.01% gives you £1 for every £10k invested. 0.1% gives you £1 for every £1k invested.

An ISA isn’t going to save you any money because you don’t pay enough tax. They’re for people who have such big savings that they get over £1,000 (or for some people £500) in interest alone.

So I’d start again and look for a better place to save. NS&I have some good options at the moment including premium bonds and income bonds.

You need a 1 year fixed rate bond. It means you have to leave it in there, no withdrawals in that year, but interest rates are much better.
You can even do it all online.
Look at what Martyn Lewis recommends and how much you can get.
I've put something in one and get 1.5%

p.s. Banks pay rubbish rates!

Everyone's right, interest rates are at an all time low. Here's what I think in steps:

1. Get some ID
2. Go to www.moneysavingexpert.com/savings/

Read and choose the best deal for you.

1. Open the account. You can never have enough savings accounts.

I currently have one account that's at 2% and one that's at 1%. They've both gone down but I'm happy with them for now as I need access to my money and don't know when I'll need it.

Good luck :)

you aren't being ripped off. You have been told what the interest rate is and chose to do nothing. Inertia marketing, I believe - the same way your insurance costs will rocket if you renew without looking. The same way that the variable fuel tariffs used by 60% of the population subsidise the rest of us - lack of effort.

you don't need ID to open quite a few online accounts. You do need to contact Santander and find that account.

most rates are now around 1%. Still seriously crap and a third or less of inflation, but 100 times less crap than you are getting.

if that is all the money then you don't need to worry about the 85k per institution protection limit.

surely I must get more in an ISA than a savings account

That's not been the case for many years, and certainly not since they introduced the £1k tax free savings allowance.

I'd put £50k in premium bonds and the rest in a NS&I income bond. Don't worry about the name, it's an instant access savings account that pays 1.15%, so pays between 11 and 115 times the interest of your bank. It's still not much, but a few hundred a year's interest instead of virtually fuck all.

Or if you don't want to gamble the interest on PBs (your capital is safe, but the 'interest' received is dependent on what prizes you win, but if you have the full amount, it should be at least the same as the income bond) just put it all in the income bond.

Thank you all - that's very helpful.

No I.D. ??
Unless you are an illegal immigrant you will have I.D.

@handbagsatdawn33

No I.D. ?? Unless you are an illegal immigrant you will have I.D.

Not necessarily. The only ID that seems to be accepted these days is a photo driving licence or passport. I have neither, and there is no legal requirement to have them unless I wish to drive or leave the country. I have managed to buy a house and get married without them. I have even travelled abroad (when they had one-year passports).

The only way to get one of them is to know people personally for three years who have a certain social status AND are not related AND have a passport AND are willing to be questioned about their relationship with you. I don't know anyone who fits those criteria. Not even one possible person. So your hypothetical illegal immigrant (who might well have a support network of friends who are willing to lie for them) ironically has a much better chance of getting a passport than I do.

I agree that getting ID if you have never had any is a nightmare. It took about three months for DB with LD to get a provisional driving licence so he had some ID even though he will never drive. He needed this so he could get universal credit. In the end a trusted colleague of mine who I had worked with for 15 years countersigned his application, even though they had never met him, they trusted me and knew of his existence. Wrong? probably, but this is how some people fall through the cracks.

Interesting you say that about ID. I’ve just been watching something about the Windrush scandal and how that was directly caused by requiring people to have ID where it wasn’t needed before. For those of us that have ID it’s not a problem, but other people have lost their access to rights and services. It’s shocking.