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Confused about savings/ISAs

Hi,

I've got around £7k sitting in an online savings account, which is currently getting 2.06% p.a. interest after tax. I may need to use some all of this money at some point over the next few months to buy a car. I am hoping to start saving regularly, but don't know at this point how much I'll be able to save monthly. Again, at some point I'll want access to the money to go on holiday.

I'm a bit confused about whether I should leave it in the existing account, move it into another savings account, or take out an ISA. Is there any point in taking out an ISA at this time in the tax year, or should I wait until next tax year?

Thanks

Comments

  • whu
    whu Posts: 23,461 Forumite
    10,000 Posts Combo Breaker
    You have £3600 cash ISA allowance each tax year so if you dont use this years allowance before April you will lose it so if you think you are going to go down the ISA route you can use £3600 this year and then add to it in the next tax year (starting in April) or open another one in April - just thought you should bear this in mind when deciding - have a look at moneysupermarket.com for current ISA rates (I think there are some that offer a higher rate than 2.6%)- hope that helps
    Keep the Faith:cool:
  • xyz123
    xyz123 Posts: 1,671 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Look at the rates available for ISA and online accounts on websites such as moneyfacts or moneysupermarket etc.

    For an ISA i know that natwest offes 3.51% on new cash isas (called cash isa plus), with the guarantee that it will not fall below bank of england base rate. Considering that the best instant access accounts offer 3.5%, natwest isa is definately a good choice as you dont pay a penny to the taxman on interest earned on that.

    Also natwest cash isa plus offeres monthly interest rate and instant access..
  • SP123_3
    SP123_3 Posts: 64 Forumite
    Looking at the Natwest Cash ISA Plus, as far as I can see it's exactly the same as the RBS Cash ISA Plus (except that NatWest pays the interest monthly and RBS pays it annually). Just wonering if I've missed something or if one has any advantage over the other? I already have accounts with RBS so would not need to open an additional account with them to service the ISA. If I was to open the RBS ISA and put in the full amount, would I lose all the interest if I was to take out some on the money further down the line?
  • xyz123
    xyz123 Posts: 1,671 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    SP123 wrote: »
    Looking at the Natwest Cash ISA Plus, as far as I can see it's exactly the same as the RBS Cash ISA Plus (except that NatWest pays the interest monthly and RBS pays it annually). Just wonering if I've missed something or if one has any advantage over the other? I already have accounts with RBS so would not need to open an additional account with them to service the ISA. If I was to open the RBS ISA and put in the full amount, would I lose all the interest if I was to take out some on the money further down the line?

    As far as i know, when you withdraw money from isa account you wont lose the interest. As it says on the RBS website the interest is calculated daily and paid annually. So if you withdraw money from the account the interest will still keep accumulating on daily balance and will be paid at end of march. If you decide to close the account then they will pay the interest when the account is closed.

    I dont think whether the interest is paid monthly or annually makes much differenct as long as you comapre AER.

    The reason i pointed out that natwest pays monthly interest was that if required interest can be withdrawn at the end of the month rather than waiting till the end of the year.....
  • SP123 wrote: »
    Looking at the Natwest Cash ISA Plus, as far as I can see it's exactly the same as the RBS Cash ISA Plus (except that NatWest pays the interest monthly and RBS pays it annually). Just wonering if I've missed something or if one has any advantage over the other? I already have accounts with RBS so would not need to open an additional account with them to service the ISA. If I was to open the RBS ISA and put in the full amount, would I lose all the interest if I was to take out some on the money further down the line?


    Also, if you have a Royalties Gold/Private account you get a bonus of 0.05% which would make the rate 4.01% for the first 12 months ;)
    Anything that I do say, is strictly my opinion :p
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