Saving money

ecksor

Ok, this isn't really covered by the charter of this board, but I think it falls under (personal) finance and I can't think of anywhere more suitable, so ...

I need to save a reasonably large amount of money over the next 12 months. I've done the sitting down to work out exactly how I can afford that (now to see if it is actually realistic), but I'm curious about how to go about saving in an efficient way.

The obvious way to me seems to be go to my bank, who I have a good relationship with, open a savings account and plonk the money in via standing order once a month or whatever. Is that naive? Should I be looking at some mega-earner-soyouaresavingforoneyear special account that some institution just happens to offer? What are the pros and cons of saving with a credit union? Any general tips, pointers and warnings of pitfalls are appreciated.

Thanks!

Boston

creidt union is a great idea, its tax free as well ,interest on what you save is about 4.5% as you save. Problem can arise in opening times and ease of extracting money. If your planing a five grand with drawl then you might have to give a weeks notice depending on what your union is like.

That said on borrowing money they tend to charge higher interest, i nthe region of 13% apr.

Victor

Originally posted by ecksor
Should I be looking at some mega-earner-soyouaresavingforoneyear special account that some institution just happens to offer?

These only exist for 3 years+. Credit Union sounds like a good idea, especially if you are planning for something specific and can arrange the withdrawl in a timely manner.

RainyDay

Originally posted by Boston
creidt union is a great idea, its tax free as well ,interest on what you save is about 4.5% as you save.

There is no 'standard' interest rates for credit unions - Different credit unions pay different rates. I've seen rates between 3% & 5% for different credit unions.

Also, credit unions decide the rate they will pay at the end of each year, so you won't know what rate you are going to get for your savings until December. Having said that, the credit union will probably beat the rates that you would get from the banks - See the Askaboutmoney.com/Sunday Tribune Best Buys list for details of the best paying deposit accounts.

daveg

Northern rock are pretty good. Afaik it'll give you the best (bank) short term interest rate.

Borzoi

On the assumption that you're saving a deposit for house or car, you'd be as well off avoiding the credit union as banks like to be able to see you put money aside for those repayments. And credit unions are not transparent, anything but.

As far as I'm aware there may even be special low interest deals in certain insitutions if you've saved your deposit there.

Just something to bear in mind.

BTW it is a good idea to use a direct debit to transfer the money every week/month to your savings account.

ecksor

Originally posted by Borzoi
On the assumption that you're saving a deposit for house or car, you'd be as well off avoiding the credit union as banks like to be able to see you put money aside for those repayments.

Incorrect assumption

However, your point may be relevant, I'm planning to study full time.

BTW it is a good idea to use a direct debit to transfer the money every week/month to your savings account.

Yeah, planning to do that. I'm hopeless at saving, so I'll need some sort of automated commitment.

Thanks for all the advice folks.

Boston

If your planning on studying full time, they you will probably want to extract the saved money over a long period, so a bank would be the best for convience of extractign money, and paying bill through. I don't know if credit unions can deposit using a direct debit, never tried. Keep in mind also the student loan things banks have going, which maybe of benefit to you.

PhilipMarlowe

You can do a standing order into a CU, though at least the one here in Kilkenny is a little different than other standing orders... the CU has a special a/c that ALL standing orders go into and where you usually fill in a reference is where you put your cu a/c #

Christ that sounds complicated... well, usually for a credit union standing order, the credit union will have a special form which should be simpler than filling out the bank's version...

Boston

hmm sounds good, pretty sure they don't do that in my credit union (its a very small operation) but i think they do it in my mother job though.

RainyDay

Originally posted by Borzoi
On the assumption that you're saving a deposit for house or car, you'd be as well off avoiding the credit union as banks like to be able to see you put money aside for those repayments.

I disagree. The days of having to have a track record within an institution in order to qualify for a load are history. The banks are really only interested in your ability to repay.
Anyway, you could always produce your credit union book to the bank if they want to see your record of savings.

Originally posted by Borzoi
BTW it is a good idea to use a direct debit to transfer the money every week/month to your savings account.

Absolutely right-get into the habit of paying yourself (i.e. your savings) first - if you leave yourself till last, there is a good chance that there won't be any money left.

Originally posted by Licksy
the CU has a special a/c that ALL standing orders go into and where you usually fill in a reference is where you put your cu a/c #

Nothing really complicated about that. Standing orders to NTL, EBS etc etc work the same way.
But not every credit union will be able to offer this service, so you'll need to check.