Kaupthing Edge or leave in ISA poor interest??

moneysavingwannabe

Hi,

I have just over £11000 in a HSBC ISA which pays just over 4%. This gives me about £41 interest a month.

I am going to have to withdraw this in December to pay a cc off.
I have just opened a Kaupthing Edge account which also pays interest monthly. But the rate is 6.5% I am not very good at working out interest rates etc.

Would I be best to leave the money where it is (always thought ISAs were better but not sure about this one!) or transfer it to Kaupthing Edge? Or is there somewhere else where I would get more interest in the short term??

Any help appreciated as I am trying to stop being loyal to HSBC and get away from their appalling rates of interest!! :eek:

JPizzle

Are you not already a HSBC customer, because their current account customers get 6.25% on the cash e-ISA, which will probably give better interest that kaupthing once tax has been taken off (I could be wrong)

Or possibly transfer to another ISA, like Barclays tax haven with 6.25% or Egg with 6.05%.

I'm no good with working out interest stuff, but again, these might give more interest than Kaupthing after tax is taken from the 6.50%

moneysavingwannabe

Hi,


Thanks for your reply.

Yes I am a HSBC customer but asked if I could transfer the ISA but they said no.

I did wonder about transferring the ISA, I have paid the maximum this year so wondered if you can still transfer. Also do most ISAs pay interest monthly? Cos it is only for the short term??

kingmonkey

You can still transfer an ISA even if you have paid in the allowance.

(I guess that) most ISAs pay annually. If you close the account early you get paid the interest up to the date it is closed.

The best ISA that allows transfers in is Icesave at 6.1% AER, and pays monthly. You would earn approximately (6.1%-4%)*£11000*6/12 = £116 more by December if you did this.

KE would pay 6.5%*(1-20/100)=5.2% if your basic rate tax payer, and 6.5%*(1-40/100)=3.9% if your higher rate.

moneysavingwannabe

Hi,

Thanks for your reply. Is there an easy way to work out interest?

I have £11,330.36 in my ISA. Paying 4.41% So interest is £42.28 this month.

I have £2,320 in Kaupthing Edge. So could put it all together in there?

Or transfer it somewhere completely different so I would like to work out the interest for each.

Thanks again

Gambit

Personally I would do transfer the money from your HSBC ISA into a new Icesave ISA. As Kingmonkey said with Kaupthing Edge you would only 5.2% (basic tax payer) or 3.9% (higher tax payer) but Icesave would pay you 6.1% tax free!
Remember that if you do an ISA transfer the money is kept in the 'tax free wrapping' but if you withdraw it and put it into a normal savings account it will again be liable to tax.

Hope this helps...

moneysavingwannabe

Hi,

Thanks I will look into this.

Also wondering whether to put the extra savings into an ISA for my boyfriend (as debt is joint) We would get more interest then??

Wasn't going to fill his ISA allowance to then withdraw it but can't see us filling his ISA after paid debt off.