£3000. ISA or ING Interest (4mths)

headhurts

I would really appreciate your help working out some interest rates:

What is the difference in interest between saving £3000 for 4 months

Abbey Postal ISA

Or

Ing Direct

The money is currently sitting in ING. Is it worth moving the money?

Basic rate taxpayer.

deemy2004

Your getting 20% tax deducted - So if both the accounts were the same gross % - you would be 20% (interest) better of in an ISA

Move it to the ISA ! you will be better off even taking accoutn of the 4 day transfer time. I guess at about £9 or £10 better off over 4 months.

headhurts

thanks for the reply.

i do know that ISA is usually the first place to stash the cash. i'm just not sure if it's worth the hassle as
it's a Postal ISA so it will be more than four days.

here are the rates:

Abbey Postal ISA 5.35% tax free p.a./AER

ING DIRECT 5.0% AER

(ING Gross: 4.89 Net: 3.91)

johnllew

£3000 in ING earns 32.15p net of tax per day.

£3000 in the Abbey ISA would earn 43.97p per day.

Every day in the ISA will earn 11.82p extra.

Say it takes 10 days to transfer to the ISA; during that period you will lose £3.22 interest you would have earned at ING. You will recoup that lost interest in 28 days in the ISA and will be around £11 better off at the end of 4 months (which is pretty much what deemy2004 said).

headhurts

johnllew... all the aer/compound interest stuff just goes over my head. i'm really grateful to you for taking the time to work this out for me for both accounts and going into the important details. whencounting the pennies and the pounds this is exactly the kind of help i was looking for.

thank you both for your help.

Walletwatch

Opened an Abbey postal ISA at the branch for my wife and meself, and the guy at the branch went out of his way to help me out - to avoid the four day loss of interest, I withdrew the amount in cash, and deposited it at the branch (inspite of this not generally entertained for postal ISAs) thanx to the guys there...

ohit

Anyone can deposit cash into a Postal ISA at a branch - it's just an account number.

Walletwatch

Well, that certainly is not what is specified in the T&Cs. Maybe they extend the courtesy of accepting money for deposit OTC for postal ISAs (which I very much doubt)

But having worked for a bank personally, I know it is well within their rights to refuse to accept cash deposits into postal ISAs. After all, that is the point for which they offer you the carrot of a better rate than the branch-based ISA

Paul_Varjak

Anyone can deposit cash into a Postal ISA at a branch - it's just an account number.

I doubt it! That is why it is called a postal account! If you could do it at the branch it would be a branch account!

ohit

Then equally you'd expect them to not accept BACS transfers, but they do.

It's clearly a grey area.

M_Thomson

Then equally you'd expect them to not accept BACS transfers, but they do.

It's clearly a grey area.

Thats a bit different. Bacs transfers cost the bank 7P per transaction. A branch transaction costs around 80p per transaction. So I don't think they mind Bacs.