What should I do to my ISA

leeegglestone

I have a Barclays Cash ISA (4.6%)
In April I started off with £12375 and have since had 9, £80 depositeds (one a month since) making it £13,095.

How much better off am I adding another £1K or £2k asap to my Account rather than keeping it in a savings account which gets (3.26%), with this one being instant access compared to the ISA.

cadboll

Hi. You've probably already tried this link - but here goes...

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1060562796,16103,

cadboll

Here's the part of the page that might be of interest to you...

Alliance and Leicester’s Direct ISA pays 5.2%, and will accept transfers of all previous years allowances. Of this rate, 0.7% is a bonus which lasts for a lengthy 15 months, until April 2007.

If you're looking for clean accounts - with no tricky bonuses - Halifax’s Direct ISA saver has a rate of 5%. If you want an alternative, or don't have internet access, Kent Reliance Building Society has a postal account which pays a clean rate of 4.96%. Both of these allow you to transfer in all previous years allowances.

grumbler

leeegglestone wrote:

How much better off am I adding another £1K or £2k asap to my Account rather than keeping it in a savings account which gets (3.26%), with this one being instant access compared to the ISA.

Assuming that you are basic rate taxpayer you pay 20% tax on interest. Hence, for every £1000 that you keep in the 3.26% account instead of ISA you lose

£1000*(4.6%-3.26%*0.8)=£19.92 during a year or about £1.65 every month.

Also if you don't add £3000-9*£80=£2280 before April 5 you lose this part of your yearly allowance and cannot compensate this loss later if your are interested in long-term tax-efficent savings.

BTW Barclays ISA is instant access too.

leeegglestone

If I transferred my ISA to Alliance n Leicester (coincidentally ive just got their current account and 10% interest savings account)

would I still get interest from Barclays from during the Year? up to the point of transfer, minus whatever penalty there may be for transferring. should be over £400 interest. am just wondering If im gonna lose out alot my transferring

It makes sense for me to shift it into Alliance - 5.2% compared to my 4.6%. does the 0.7% bonus mean that after 2007 it goes back to 4.5%.
So really i would get 2years with an extra 0.7%, roughly an extra £90 per year not taking into account my additions per month.

lindabea

leeegglestone wrote:

If I transferred my ISA to Alliance n Leicester (coincidentally ive just got their current account and 10% interest savings account)

would I still get interest from Barclays from during the Year? up to the point of transfer, minus whatever penalty there may be for transferring. should be over £400 interest. am just wondering If im gonna lose out alot my transferring

It makes sense for me to shift it into Alliance - 5.2% compared to my 4.6%. does the 0.7% bonus mean that after 2007 it goes back to 4.5%.
So really i would get 2years with an extra 0.7%, roughly an extra £90 per year not taking into account my additions per month.

Yes, you will get interest from Barclays upto the date you transfer. Remember, it may take a few weeks to transfer, and you will lose this much of interest. You may say it's negliguble compared to the extra amount of interest.

The extra 0.7% you will get from A&L is only for 1 year - it expires in April 2007.

grumbler

leeegglestone wrote:

...would I still get interest from Barclays from during the Year? up to the point of transfer, minus whatever penalty there may be for transferring. should be over £400 interest. am just wondering If im gonna lose out alot my transferring....

No penalty, interest will be added to the transferred amount.

grumbler

lindabea wrote:

...it may take a few weeks to transfer, and you will lose this much of interest.

Based on my experience with other banks, this is incorrect. Yes, transfer can take a few weeks, but you lose interest only for few days.

leeegglestone

Whats difference between the Direct ISA & Alliance & Leicester Cash ISA? as i was wondering if the Direct ISA had different interest bands. with this would I automaticallt get 4.5% after 2007. as i cant see why ppl would use the Cash ISA if it has lower rates.

The Direct ISA has 5.2% but Cash ISA has different bands just like my Barclays
3.8% for £9K+
4.15K for 18K+

grumbler

leeegglestone wrote:

... as i cant see why ppl would use the Cash ISA if it has lower rates.

Why are you still using Barclays? ...

missile

grumbler wrote:

Based on my experience with other banks, this is incorrect. Yes, transfer can take a few weeks, but you lose interest only for few days.

For your info: I transfered from A+L Cash ISA on 12th Jan and it was in my Nationwide ISA on the 18th Jan