Best place to put some savings until May 2009?

golly99

Hi

I currently have some savings (approx £5k) which i intend to use to pay off a cash advance we got from Nationwide a couple of yrs ago (it's coming to an end next May). Just wondering of the best place to put it for that length of time. Currently sitting in a Cahoot savings account at 5%. Main critieria is just that I can transfer out when the time comes in May, have left it with Cahoot as having current account easy to transfer between the two.

Cheers

DeepSporran

If you haven't already used your cash Isa allowance of £3600, that's the first place to go.

Otherwise, if you definitely don't need access until next May, have a look at fixed term , fixed rate accounts (6 or 9 months). For instance, Bank of Cyprus UK offers 7% gross for a 6 month account. Anglo Irish bank also offers 7% gross on a 9 month term.

I take it the Nationwide cash advance is at 0% (or a very low rate)? If not, can you pay it off early ? No point in earning taxable interest on your savings while still paying interest on your debts

isofa

See the best buys at MoneyFacts.

Birmingham Midshires will have a 7.17% 1 year fixed rate "bond" as of tomorrow.

Or for instant access I'd go for Kaupthing Edge or Icesave.

golly99

Thanks for your replies. The Nationwide cash advance is just like another mortgage rate is 5.14% i think, hence wanting to pay it off next year, if I paid it off now, would need to pay a early payment fee.

Probably cant do the 1yr fix bond as the money won't be available to pay off the nationwide advance next May - so will look into some general savings accounts i reckon.

DeepSporran

If your Nationwide loan is definitely at only 5.14%, then you possibly wouldn't want to pay it off early even if there was no penalty. If you are a 20% tax payer, then by achieving 7% gross on a savings account, that equates to 5.6% after tax. That's better than the rate you pay on the loan, though the benefit to you over 9 months is only about £18 on a £5K loan. If you're a 40% tax payer, then 7% nets to 4.2% which is not high enough to balance the 5.14%.

However, since there is an early settlement penalty, this is all irrelevant.

golly99

DeepSporran- thanks for the info, yep the rate is definitely 5.14%, might look into putting future payments into an better rate of interest account, i'm limited to paying off £500 a month anyway, but gets quite addictive seeing the amount go down every month! What I didn't want to do is to take out another mortgage for the borrowing as our other nwide one still has 4 yrs to run, so would be more fees setting it up again etc.

thanks again.