ISA vs Monthly saver (6%) Which is best??

Rob_Jenkins

I currently have the maximum £3600 in my ISA, but the rates being offered currently, are a bit poor compared to what appears to be available elsewhere..

My plan is..

Leave my ISA alone for the moment, and open up a Barclays monthly saver
(which states.... Earn a fixed interest rate of 6.00% AER (5.84% gross pa*) in months when no withdrawals are made.)

And each month take £250 out of my ISA and put it in the saver (So I should earn money on my ISA as the balance reduces, but also money in the monthly saver too as that goes up.. I realise the monthly saver will be taxed, but it appears a better rate than an ISA even when the tax rate in factored in..

Does this seem like a sound idea..?? I can quite easily not withdraw it, so there shouldnt be any issue getting the higher rate of interest on it..

Rob

littlemrtinkle

you are forgetting you are losing that tax free allowance, in future years when rates are high you may regret this. Choices Choices.

Rob_Jenkins

Well, I thought..
as each month the ISA gets less and less.. I would still earn interest on it, (although not as muchas if I left it all there), but the interest I would get, would be tax free..

Also, the tax based interest on the monthly saver, still works out more than what the ISA is offering tax free..

And if next year, when interest rates look more promising, I would just put the money back into an ISA again... (I can do that cant I, i can just move the allowed maximum back into one at the beginning of next tax year cant I... thats my understanding of it)

pressuredrop_2

ISA interest rate is?

Rob_Jenkins

Well, the one its currently in is dropping to 2.5%, but if I shopped round I could get 3.25 or 3.5%

I just think that 5.87 taxed would be a better rate...?

Is that not the case?

pressuredrop_2

On £3000:

RS will pay about £80/year.
ISA will pay about £75/year.

Basic rate tax.