Most reliable variable rate cash ISA

Mr.Average

Hello, I'm 17 and have some money to invest. I just closed my NS&I account that was only paying 1% interest. I am wondering which is the best cash ISA. I will be 18 soon so tax free savings would be best.

I want an e-ISA with no penalties. I am looking at the HSBC e-ISA with 3.25% AER. I don't want it to have a bonus and I expect the rates to stay as good as they are (in relation to the Bank of England Base rate).

Any advice greatly appreciated. Thanks.

Lokolo

How much do you earn per year? And how much do you have to save?

If you are not a taxpayer and you don't h ave a lot of money to save it maybe more beneficial to get a savings account and not pay the tax on the interest.

Mr.Average

£1500 per year and I have about £1000 to save.

I will be 18 in 5months so will be paying tax then.

Thanks for the reply.

Lokolo

Age doesn't matter when it comes to tax. The amount you earn determines whether you pay tax.

If you earn £1500 per year no matter how old you are, you won't pay tax.

If you have £1000 to save you want to find the highest rate going and put it in there. As you are not a taxpayer (and won't be until you start earning more than around £6000 per year, no matter your age) you can fill in an R85 form and get tax free interest.

Mr.Average

Ahh. Ok, thanks. So i'll just scour around for the best savings account or ISA I can find.

:-)

Baldur

Information about the most consistent Internet Savings Accounts & Cash ISAs 18/36-month periods can be found here (just select the appropriate tabs) - http://www.moneyfacts.co.uk/money/consistent/3/consistent-mini-cash-isa-18.aspx

Mr.Average

Ok thanks YBS seems pretty good.

I am thinking YBS or Northern Rock...does anyone have any opinons?

Both of them being the e-saver type things.

martinman3

I hope that you are looking at the 36mths list too as you should consider the longest period possible when looking at consistency of rates.

I agree that the YBS e-ISA looks good for you but others should also consider the Monmouthshire BS and Leek United BS which have both treated savers well and not made full BOE cuts. Leek United actually ignored one 0.25% BOE cut last year on their ISA, at time of writing they have not responded to last 1% cut.

Mr.Average

Those ISA's seem pretty good but since I don't pay tax anyway is there any need?

So surely a YBS 3.75% e-saver would be best and it's easy access online as well?

Lokolo

It depends. If you are keeping the money for 10 years. And in 2 years you become a tax payer, an ISA will mean you have 8 years of tax freeness, whereas in savings you would have 2 years tax free, 8 years taxed.

But with the amount you have its not worth putting in an ISA with a lower rate, as you can then use the £1000 + interest and move into an ISA when you start paying tax, and if you still have the money....

Mr.Average

Oh, ok.

Well thanks for the advice everyone.

I've decided to go for a savings account for now with YBS then I can switch when I become eligible for tax.