My mum has £10,000, which isa/bank account is best?

buel

Hi there,
my mum has £10,000 and wants to earn interest per month and doesn't really want to have to lock her money away, please can anyone offer me/her any advise as to which account would pay the highest per month without locking all the money in? Thankyou in advance..!-Craig

obsessed_saver

You can only put in £3600 into a cash ISA every tax year, so if your mom hasn't used any allowance this year, have a look at this thread for the best available list:

http://forums.moneysavingexpert.com/showthread.html?t=401374

Similarly, you can find the best savings account article from this website:

http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

Obviously, the usual disclaimer applies - you have to make your own decisions and read all the fine prints to make sure the account is what you're looking for.

ManAtHome

If she's over 50, can certainly recommend the Coventry and Saga accounts on the main site (obsessed_saver's link in post 2) - very easy to open and operate on-line. If she wants the monthly interest but not the capital, the Saga fixed-rate/term accounts are worth a look as well.

buel

Hi there and thankyou for your help! Just 2 questions for you please?-
1, I have taken a look at Coventry's 50 plus account which states 6.25% interest but their 60 plus offers only 5.75%, why isn't the over 60 account a better option? (i was under the impression that the over 60 one would neccesarily be a better rate?)
2, please please can anyone give me/explain to me a method of working out what the the monthly interest payment il get from my mum's £10,000 using a given rate of interest, ie- 6.25 from Coventry.
Thankyou- Craig
Ps- actually i want the monthly amounts on my mum's Isa of £3,600 and the saving account of £6,400
Pps- my mum is 60 years old.

roddydogs

The over 60 one is an old rate-if you have this you CANT switch to get the over 50 rate, its "New customers only"!!! why use this anyway when you can have Kaputhing @ 6.55%
Coventrys rate is only for 1 year, after that it drops anyway by which time theyll probably have another better paying account that existing customers cant transfer to!

buel

Hi. thankyou for your answer, im sorry i ask such basic questions, im new to forums (and financial maters!)
Just one more question- please please can anyone give me/explain to me a method of working out what the the monthly interest payment il get from my mum's £10,000 using a given rate of interest, ie- 6.25 from Coventry.
Thankyou- Craig
Ps- actually i want the monthly amounts on my mum's Isa of £3,600 and the saving account of £6,400

opinions4u

This takes a bit of thinking around, and discipline, but let's see if other people agree.

1) Don't necessarily search out the best monthly interest account, pursue the best rate with access
2) Work out what monthly income you want and simply withdraw it - but never be tempted to draw more than you need
3) Regularly review the rates and be prepared to move funds around - I would expect rates to fall over the next 12 months as the credit crunch eases

£10k at 6% = £600 a year minus tax = £480 a year.

Mum can therefore say £40 a month is interest.

Put £3,600 in a high rate ISA (e.g. 6.25% at Barclays or HSBC) and £6,400 in a high rate instant access account (e.g. Birmingham Midshire, IF, Egg etc) paying around 6.3%-6.52%.

Withdraw £40 a month from this account - never a penny more. If you don't need it, leave it in, or withdraw less.

On 6th April 2009, search out the best ISA rates and move £3,600 in to it and consider transferring your other ISA funds in to it too.

On 6th April 2010, move the remainder of the funds in to the best paying ISA and all your money will then be earning interest tax free. Continue to withdraw £40 a month if needed.

This would actually mean that if rates stay the same or fall by 1%, Mum will still see a small amount of increase in her capital.

One risk of withdrawing all interest is that the impact of inflation can mean your £40 a month in a few years time buys significantly less.

The other consideration needs to be what to do if rates fall significantly, as you will then be eating in to the capital.

buel

Absolutely Brilliant reply, thankyou so much! Just so you know, my mum doesn't neccesarily have or want to withdraw any money every month so that is a bonus i guess?

buel

just a question - 'opinions4u' said "£10k at 6% = £600 a year minus tax = £480 a year.",I thought isa's were tax free?

buel

Hi there, please can anyone help me out? My mum has over £10,000 in savings, she is going to put £3,600 in a Hsbc isa and the rest in a high interest savings account but today a Hsbc representative told her that there is no need to put the money in an isa being as she is over 60 years old and, therefore, retirement age so wouldn't pay interest anyway, is this true?