Ask Sindie: It's rural life but the interest rates are far too quiet
Can a village hall get its bank accounts to shout their interest from the rooftops?
Sunday 10 December 2006
Q: I have recently taken over as the honorary treasurer for our local village hall, which is a registered charity.
It is hired out for functions or hosts local societies and has the usual expenses for refurbishment, refuse, electricity, water, health and safety, etc.
At present we operate a NatWest current account, which has £7,000 in it but accrues no interest, and a Nationwide deposit account containing £23,000 and earning only 2 per cent.
On average, our trading account is in credit to the tune of between £1,000 and £2,000.
Our deposit account is fairly static - other than interest being added, there were no transactions at all last year - and is simply there for "emergencies".
I can't help feeling there could be better ways of holding our funds. Ideally, I would like to operate internet and/or postal accounts.
MP, by email
A: There are certainly some better deals available than those you are getting now.
When looking for a current account for a charity, you will find there are only a few that offer interest on balances in credit as well as free banking services.
Financial analyst Money- facts suggests the following charity current accounts, although none of them can be operated over the internet.
Bank of Scotland Treasurers Account pays 1.6 per cent on balances of £2,500 and above; the Halifax offers 1.3 per cent on £5,000; Leeds building society pays 3 per cent on £100; and Royal Bank of Scotland is offering 1.25 per cent on anything over £1.
For your £23,000 on deposit, you can get 5 per cent from Standard Life Bank's business bonus account (although this will fall to 3.9 per cent from April 2007). The account can be operated by internet and telephone, and Moneyfacts points out that this is an extremely good deal and may not be around for long.
Anglo Irish Bank offers three options for charity savings balances. You can get 4.80 per cent for instant access, 4.85 per cent for withdrawing money at seven days' notice and 4.95 per cent for 30 days' notice - all on balances of £5,000 or more. These accounts can be operated by post and telephone.
For convenience, you could also look at Abbey Business Banking, which is advertised as being "free for life".
This service lets you pay in money at the bank's branches or by post, and transact business and view statements on the internet.
It is not a special charity account, but Abbey says that charities can use it.
As you can deposit £3,000 in cash each month without charge, this free deal is handy if you have bar receipts or sell tickets for events. You also get a debit card, which can be used for cash withdrawals from an ATM or for online payments.
Abbey would give you 1.15 per cent on the £7,000 in your current account, and 4 per cent on the £23,000 you have on deposit, if you were to use its Business Reserve account.
This can be linked to a cheque account, so you can switch funds between accounts. It can also be operated on the internet.
Another option is private bank Cater Allen's Charity Account. This will pay a rate of 4.20 per cent on your £23,000 but is operated by telephone and post only, with deposits made via Royal Bank of Scotland branches. For more information, visit www.caterallen.co.uk.
Finally, it may be worth reviewing the incomings and outgoings of the village hall coffers to see if it is necessary to maintain a £7,000 credit balance in a current account. If not, the excess could be transferred to the higher-paying deposit account.
When considering which savings account to go for, watch out for the "tiered" effect, which could lead to smaller rates being earnt as the amount on deposit rises.
If you need help from our consumer champion, write to Annie Shaw at The Independent on Sunday, Independent House, 191 Marsh Wall, London E14 9RS or email firstname.lastname@example.org. We cannot return documents, give personal replies or guarantee to answer letters. We accept no legal responsibility for advice given
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