ISA v high interest bank a/c

andrewf_2

Can someone confirm I've done my maths right here?

I currently have £2167 sat in an ISA that is paying not a lot. The best recommended ISA pays 6.25%

Using Martins savings calculator and putting in NO TAX, it gave me a saving rate of £302 profit.

Now I have the A&L bank account that pays 8.5% on the balance, so putting that into the calculator and putting BASIC RATE TAX I get £314.

Its not a vast sum, but am I right in how I've worked my figures out? If so then I guess whilst I still have the special bank rate, my savings are better in there than in an ISA?

Cheers Andy

talana

£2167 for 1 year at 6.25% (no tax) = £135 ish
So I don't quite understand your figures but the gist of what you say is right.

ISA at 6.25% (no tax) compared to 8.5% gross which is 6.8% net.
But don't forget that the A&L account only gives you 8.5% on the first £2500. Any more than that and you want to move it as the difference is not earning anything.

oldfella

I make it £135 and £147

its also worth considering that with an ISA you get tax relief every year in the future as well

andrewf_2

Re the figures, just me being an idiot.

Original calculated using £2K, so when I worked out at £2167 I forgot to deduct the £167 from the returned figure:rolleyes:

Given that it is unlikely that I'll have more money to pay in, I'm tempted to leave it all in the bank. Also the tax year for the ISA will run out before my bank offer rate.

I'll just have to remember if I do go over £2.5K that I set an ISA up.

Cheers all

talana

The A&L account also requires you to deposit £500 minimum every month.
If you have £2167 in there to start with, as soon as your salary goes in each month (lets say) you're going to be comfortably over the £2500 cutoff for earning the 8.5%

All in all, although the headline rate is good I wouldn't use it as a savings account.

andrewf_2

I have just been rethinking this out whilst you've been replying and I think the ISA way is the better way.

I also forgot about the fact that if I take the money out of my ISA I wont be able to transfer it into another ISA in the future without it counting as part of my yearly allowance. I think I right in thinking that if I transfer the ISA money now into a new ISA it DOESNT count towards my annual allowance?

Lokolo

Yes but you have to fill an ISA transfer form, i.e. don't do it yourself, fill in a form and let the banks sort it between them.