Saving account Vs ISA

MichelleM123

Hi All,

I'm a bit confused to where I should be putting my savings with all this interest rate changes, I was wondering if anyone can help!

I recently opened 2 accounts with egg after Martin recommended them:

1) Regular saver - which is 6.3% gross/AER fixed for a year. The net figure for this is 5.04%.

2) Cash ISA - it was 6.05 AER variable with a net figure of 4.84% but it has now dropped to [FONT=Arial, Helvetica, sans-serif]4.55% gross pa/AER (not sure of the net figure now as can't seem to find any figures anywhere!)

Is the ISA the best bet as it's tax free or did I get a good deal with the regular saver and stick my cash in that and forget the ISA?

Any help is appreciated[/FONT][FONT=Arial, Helvetica, sans-serif]!

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earlgrey_3

The net interest for your ISA will be the same as the gross interest because there's no tax to pay.

Could depend on your circumstances and whether the Egg rate is fixed or variable but big disadvantage of withdrawing the ISA savings is that you'll lose that allowance for this year. If you can, you should pay in your full ISA allowance each year to build up the total. If you can find a better ISA rate you can tranfer to that without losing your allowance.

caracal_77

HSBC pays 8% AER for regular saver (GBP1.00-250.00 per month) and 10% AER if you have a plus account with them. To get their 8% you have to have an advance account which is free. I guess this is good for someone who's already HSBC customer.

sloughflint

Were you intending to regularly fund the ISA for the rest of the year? Does the Egg account allow penalty free withdrawals?

If yes to both, I would fund Egg over the ISA and then withdraw and place as much as possible in the ISA just before 05/04/09 to get the tax benefits.

MichelleM123

earlgrey wrote: »

The net interest for your ISA will be the same as the gross interest because there's no tax to pay.

That's what I thought but when I emailed egg to ask what the interest rates are for both these accounts they said the ISA is 6.05 AER variable with a net figure of 4.84% - which is what confused me in the first place! I'm not sure what there talking about.

Yes, I am intending to save regularly - around £300 a month. Both the regular saving account and the ISA have no penalty fee's so you can withdraw money whenever you need.

The ISA is variable but the regular savings is fixed.

I have thought about the HSBC account as I do bank with them - but it's not right for me just yet as you can't touch your money for a year. I've just bought a house so I need to know I can get to my money if something unexpected happens.

I think I will take your advice and use the regular savings for the year, but transfer it to the ISA just before the deadline to build up the total.

Thank you for all the advice!

sloughflint

MichelleM123 wrote: »

That's what I thought but when I emailed egg to ask what the interest rates are for both these accounts they said the ISA is 6.05 AER variable with a net figure of 4.84% - which is what confused me in the first place! I'm not sure what there talking about.

I suppose it might be best to check that the account really is an ISA if they are talking about net rates. It would be a shame if funds you've already placed aren't tax free.
Hopefully it's just a case of an adviser misunderstanding the situation.

Baldur

The Egg ISA is currently showing as 4.55% gross/AER, it was previously (from 6th April to 13th November) paying 6.05%.

Presumably, if you had paid in the full allowance on 6th April, the rate cut on 13th/14th November would bring the acheivable AER down, hence their 4.84% net figure?

MichelleM123

Yep, it's definitely an ISA. I just made 100% sure and the account says "Egg cash ISA"

I didn't pay the full allowance. I've only just opened the account this month so haven't got much saved so far.

I'm totally confused about this... I think a phone call to Egg to find out more is in order. Hopefully someone just made a mistake.

Thanks guys!