The best time to open an ISA?

Mela121

Hi!

I'm wanting to open a fixed rate (1yr) ISA to put in some of my savings.

When is the best time for me to open it?

Also is it better to pay in a lump sum of £3,600 or pay it in instalments over the tax year? Does it make a difference interest wise?

Please try and explain as simply as you can - i'm not very savvy when it comes to money lingo :rotfl:

Thanks!

whu

You can put £3600 in by April 5 and then put in another £3600 on April 6 that way you use this years allowance and next - it is better to put in a lump sum as then the whole amount will be earning money tax free asap - have a look at moneysupermarket.com for the best current rates/or this site - hope that helps

Mela121

I'm only planning on putting money in for a year - so is it best to put it in at the beginning of the tax year? or is it okay to put it in nearing the end? - i'm not sure how the interest is paid, is it at the end of the year or monthly?

Sorry I don't know

whu

Mela121 wrote: »

I'm only planning on putting money in for a year - so is it best to put it in at the beginning of the tax year? or is it okay to put it in nearing the end? - i'm not sure how the interest is paid, is it at the end of the year or monthly?

Sorry I don't know

It doesn't matter whether you put it in at the beginning or end of the tax year - the main thing is the rate of interest that you will get for a year- nobody knows whether the rates will be better pre or post April 6 although traditionally ISA rates are put up around April 6 to get money in for the new financial year but maybe they have peaked with the latest interest rate cut - only you can decide whether you think they have peaked now or will go higher nearer April 6 - you can get ISA's that pay interest yearly or monhly

ragingbass

Most of the ISAs will calculate the interest daily, so the longer you have it in the better i.e. If you put in a lump sum on 6th April then you'll get the maximum amount of interest for the tax year

nrsql

>> Also is it better to pay in a lump sum of £3,600 or pay it in instalments over the tax year? Does it make a difference interest wise?

You will get interest for the amount of time the money is in the account. It won't be added daily but it will (probably) be accrued daily.
So the longer the money is in the more interest you will get.

But you need to take into account where the money will be outside the account when doing the calculations. If you get more interest after tax in a different account then it's better not to put it in until the end of the year (if you still want the tax wrapper).

Paul_Herring

Mela121 wrote: »

Hi!

I'm wanting to open a fixed rate (1yr) ISA to put in some of my savings.

Assuming you're wanting to withdraw it out of the ISA sometime March/April '10, and you're not intending to keep the money in an ISA after that...

When is the best time for me to open it?

As soon as possible.

Also is it better to pay in a lump sum of £3,600 or pay it in instalments over the tax year? Does it make a difference interest wise?

Lump sum. Money earns pro-rata interest for the time it's in the account.

obsessed_saver

Mela121 wrote: »

I'm only planning on putting money in for a year - so is it best to put it in at the beginning of the tax year? or is it okay to put it in nearing the end? - i'm not sure how the interest is paid, is it at the end of the year or monthly?

If you have £3600 now, you should put it in before April 5 so that you use up your 2008/2009 allowance. That way, if you have more money after April 6, you can put in more money in the 2009/2010 allowance.