Isa or Fixed Rate Bond?

norbie

Hi,

I have approx £2600 in Icesave ISA coming back to me soon that will be going in another easy-access ISA to maintain it's tax free status.

I have another £2000 to save available to me right now. Should I get this in a fixed bond (now before rates drop), or will I be better off putting it in my ISA?

There are 7% fixed rate bonds (5.6% Net). Does this basically mean because it's not tax free I earn 5.6%? Because if I can get an ISA for 5.5% this could be a better deal...

I'm not sure how much more I can get in my ISA this year, but I'm certain I can fill it up before April.

I would be grateful for your advice. Many thanks.

lynzpower

Im not sure Im 100% right here from what you write.

If you have isda wrapped money ( from icesave or anywhere) that is "coming back to you?" I take it you mean you are transferring the money electronically into a non isa wrapped current account THEN moving it into another ISa you cant do this ( unless ICEsave debacle has allowed this)

My understanding is for ISAs one needs to transfer into another ISA provider ( I transferred this years SMile ISA into Ruffler ISA. OH has moved his Co-op ISa into a NAtwest ISA - this has been done by the cash not hitting our current accounts at all- only transferring between ISA products.

You can only open 1 isa per tax year.

As I say i dont know if you have a special privilidge due to the ICESAVE problems ( i was with kaupthing, savings but not in an isa) so not 100% as I say.

Baldur

lynzpower wrote: »

.......you cant do this ( unless ICEsave debacle has allowed this)

It has, an ISA certificate will be issued in respect of returned Icesave ISA funds.

norbie

Yes the ISA will come into my current account then go into a replacement ISA with a certificate. Sounds messy, but it's essentially just an ISA transfer.

Is my money going to make me more money in a fixed rate bond now than in an ISA? Am I understanding the interest in my first post correctly?

Baldur

norbie wrote: »

Yes the ISA will come into my current account then go into a replacement ISA with a certificate. Sounds messy, but it's essentially just an ISA transfer.

Is my money going to make me more money in a fixed rate bond now than in an ISA? Am I understanding the interest in my first post correctly?

In the short term maybe, but the ongoing tax-free status of the interest which you have already earned will be lost.

norbie

That's a good point. I think I will just put it all into an ISA then when I get my IceSave money back.