Suggest a saving product please

Baldur

CYPER wrote: »

What happens with the interest earned in the period present-04.2009? I believe I earn interest again on it in the period 04.2009-04.2010?

That's what I said, as far as I can see.

CYPER

Baldur wrote: »

That's what I said, as far as I can see.

Sorry. My financial knowledge is limited, so I did not understand it. I prefer the simple childish explanations . But your and everyone else help is much appreciated :beer:

The_Fiddler_2

CYPER wrote: »

Ah now I get it. Basically if I put the earned interest from the ISA in a non-tax free savings account to earn interest from it, then I pay tax on that new interest. (what a complicated sentence - I hope it makes sense to you )

Yes, that's what I meant origionally , sorry that my post wasn't clear.

CYPER

I have one more question. Let's say I put £3600 on 04.2009 with 5% fixed interest. On 04.2010 I'll have £3780. Do I have to take the interest earned out of the ISA, because it is over the allowance of £3600? Or If I want to move the money to a better deal ISA can I move the whole amount or just the £3600 max allowance? In other words is it allowed to top up the ISA with the earned interest?

CYPER

And can someone please explain to me how do banks manage to offer 6% variable ISAs, when the BOE rate is only 3%. Is it logical to expect a rate decrease within all ISA providers any time soon? I just can't stay 6% untill 04.2009 if BOE rate is well below 5%, can it?

[Deleted User]

I have one more question. Let's say I put £3600 on 04.2009 with 5% fixed interest. On 04.2010 I'll have £3780. Do I have to take the interest earned out of the ISA, because it is ver the allowance of £3600?

No - the interest isn't counted towards your limit - the limit dictates how much you can deposit into the ISA in any one year.

Or If I want to move the money to a better deal ISA can I move the whole amount or just the £3600 max allowance? In other words is it allowed to top up the ISA with the earned interest?

You can move the whole thing as the limit of 3.6k only applies to depositing money in that particular financial year

And can someone please explain to me how do banks manage to offer 6% variable ISAs, when the BOE rate is only 3%. Is it logical to expect a rate decrease within all ISA providers any time soon? I just can't stay 6% untill 04.2009 if BOE rate is well below 5%, can it?

You'd be wise to pick a fixed rate ISA while they're still around at the current higher rate...

1. ISA advise: http://www.moneysavingexpert.com/sav...gs-without-tax and http://forums.moneysavingexpert.com/....html?t=401374

A few more options of course when your ISA is full:

2. Regular savings accounts are good too:

http://www.moneysavingexpert.com/sav...vings-accounts
and http://forums.moneysavingexpert.com/....html?t=608697

Regular savings accounts are generally a good place for new money e.g. monthly pay cheques, however if for example you have £3k in a 6% high-interest bank account drip-feeding into a 10% regular savings account then you're essentially getting 8% interest on average for your £3k which beats most fixed rate products - albeit with a bit more work.

3. If you want something with a little less work then fixed rate savings accounts are a good option:

http://www.moneysavingexpert.com/sav...interest#fixed
and http://www.thisismoney.co.uk/saving-...&in_page_id=50

4. One other thing you might like to consider is getting a decent instant access savings account:

http://www.moneysavingexpert.com/sav...st#topaccounts
and http://www.thisismoney.co.uk/saving-...&in_page_id=50

5. Finally if you're a higher rate tax payer then NS&I's 3 and 5 year Index Linked Savings (http://www.nsandi.com/products/ilsc/index.jsp) look good, paying 1% above the RPI inflation rate. Currently this is 5.0% so that’s a rate of 6.0% overall.

The attractiveness of these is that the savings are tax-free meaning it's better for higher-rate taxpayers. Basic rate taxpayers would need to earn 7.5% in a normal savings account to match this, while higher rate taxpayers would need 10.0%.

One thing to note is if inflation drops then so does the rate for these savings. It'll always be higher than inflation and tax free though. It's also best to leave the cash in there for at least three years though and at least £100 must be deposited (maximum is £15,000), so it's not for those who want a short term place to save.