What to do with £4k

ronniet_3

Hi all,

First post, so be gentle!

I have £4k (with the Lloyds TSB) which I would like to get working for me. I was thinking of opening an account with Kaupthing Edge and putting the £4k in there (read good things about them on here) and leaving it to get me some interest, but how much interest would it make each month?

Only time I'd touch the £4k is in the event of an emergency.

I don't have any credit cards. I am paying back a loan to the bank (Lloyds TSB) but they can wait.

Any advice would be much appreciated!

Iguana

do you have an ISA?

ronniet_3

Iguana wrote: »

do you have an ISA?

I don't, no.

Is an ISA better than a Kaupthing Edge account?

(excuse my ignorance, I'm new at all this banking stuff)

Aegis

ronniet wrote: »

I don't, no.

Is an ISA better than a Kaupthing Edge account?

(excuse my ignorance, I'm new at all this banking stuff)

An ISA is tax free. Unless you're a non-taxpayer and registered as such with your bank, you'll have 20% of your interest deducted as source to cover your income tax liability.

ronniet_3

Aegis wrote: »

An ISA is tax free. Unless you're a non-taxpayer and registered as such with your bank, you'll have 20% of your interest deducted as source to cover your income tax liability.

So if I was to max out an ISA with £3.5k, what would the interest on that be?

Are all ISA's roughly the same? Are LloydsTSB ISA's good/bad?...

Thanks for taking the time to help me out folks, I really appreciate it.

Aegis

ronniet wrote: »

So if I was to max out an ISA with £3.5k, what would the interest on that be?

Are all ISA's roughly the same? Are LloydsTSB ISA's good/bad?...

Thanks for taking the time to help me out folks, I really appreciate it.

The interest rate varies as much as with normal savings accounts. One of the best variable rates at the moment would probably be 6.25% tax free. I'm not sure how Lloyds compares to that, but I suspect they're not as good.

Iguana

Read Martin; he does it better than me:

http://www.moneysavingexpert.com/savings/best-cash-isa

a7man

Whats the rate of interest on your loan!? If the interest on your loan is higher then the amount you will make off an ISA investment you will just be wasting money.

ronniet_3

a7man wrote: »

Whats the rate of interest on your loan!? If the interest on your loan is higher then the amount you will make off an ISA investment you will just be wasting money.

Off the top of my head, I believe it's about 1 to 1.5% on my loan. It'll be payed back within seven years which will leave me debt free :j

Aegis

ronniet wrote: »

Off the top of my head, I believe it's about 1 to 1.5% on my loan. It'll be payed back within seven years which will leave me debt free :j

Are you sure about that loan interest rate? Most loans from banks at the moment would be closer to 10% than 1%, and I can't think of a single time in the last decade where 1.5% loans would have been offered (i.e. below the bank of England base rate)...

a7man

Yeah I'd almost certainly say pay off the loan first (as long as there are no penalties for early settlement). If there was a loan available for 1% everyone would take it and invest the money.