help with savings

diane118

hi i have a £2000 in a current account with the alliance and leicester it earns me 7.3% also they said i could change it to another one of there accounts and get 8.3% interest would i earn more interest if i put it in an isa, i pay tax. Thanks Diane

Lokolo

It depends on the rate in the ISA as well as your tax payer rate.

Are you a 20% tax payer of a 40% tax payer?

diane118

hi i am a 20% tax and i was thinking of the post office isa i think it is about 6.5% thanks Diane

Lokolo

8.3% - 20% tax = 6.64%.

But obviously this rate won't last forever and you will stay a tax payer.

If you're only keeping the money for a year or so then yeh, otherwise I'd stick with the ISA so you can keep getting tax free interest even when that rate goes.

Baldur

diane118 wrote: »

hi i am a 20% tax and i was thinking of the post office isa i think it is about 6.5% thanks Diane

PO Cash ISA is currently 6.25%.

innovate

PO also operates under a passport scheme, i.e. you would have to reclaim from the Irish compensation scheme if they go bust. You may or may not be comfortable with this.

Please read Martin's page about safety of savings.