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Isa 2014/15
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# 1
dosh1
Old 21-03-2014, 7:26 AM
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Default Isa 2014/15

Now that we are able to save 15K (tax free ISA) from July, is it recommended to setup an ISA in April for the current allowance (5760) and then add to this sum (totalling 15K) in July or would it be best to do nothing until July and then setup an ISA for the full amount?
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# 2
bowlhead99
Old 21-03-2014, 7:39 AM
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If you have the approx 6k of cash (or, any smaller amount of cash) which is already available and you ultimately want to put into an ISA in July, why would you not want to put it in three months earlier?

The only reason would be if you had better use for it outside the ISA. For example if you can stick it in a savings or current account outside an ISA wrapper that gets you more after tax than the best cash ISA product you can find, then there is no point putting it in an ISA on 6 April. Or in July, for that matter.

The new rules allow transfers between S&S ISAs and cash ISAs as well as vice versa. So actually you could put almost 12k in total into ISAs on 6 April and then move them into one pot (together with a new 3k) in July. Of course, the element you put into the S&S ISA will be subject to investment / stock market risk over the period from April to July and a number of S&S providers have exit or account closure fees. So it probably doesn't work for someone who wants to go back into cash in July, but is a possibility for people who are not going to be looking at putting their 15k exclusively in a cash product.
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# 3
Archi Bald
Old 21-03-2014, 7:47 AM
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If you must put your money into a cash ISA in April and intend to make full use of the 15K in a cash ISA this year, don't choose a fixed term ISA without understanding how you can deposit your extra money after July 1.
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# 4
dosh1
Old 21-03-2014, 9:40 AM
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I guess my thinking was more around better rates being available in July when banks will want to entice savers to open an ISA with them. I recognise if choosing the right account you can transfer ISA's but just wondering if it is worth it for the sake of three months.
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# 5
Archi Bald
Old 21-03-2014, 9:57 AM
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You are making some assumptions that are unlikely to be correct. The ISA providers haven't done anything special for the current ISA season, general interest rates won't rise by July, so I believe it is highly unlikely they will do anything much different in July.

People seem to think banks are desperate for savers' money, and to pay them lots of interest in ISAs. Reality is that banks still get massive amounts of very cheap money through the funding for lending scheme and don't really need savers' cash.

Also, the banks have already got most if not all the cash that people are thinking of shifting into ISAs in July. That money is dirt cheap for the banks at the moment. There is not much of an incentive for the banks to pay people higher interest for this money.

In other words: keep your hopes for some stunning deals in July to an absolute minimum.
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