Saving advice needed!

should_save_money_newbie

Hi,

I've saved up £3000 and currently it’s sat in my bog standard high street saving account (waiting for a rainy day)

I was going to put £1000 into a mini cash ISA before April, probably Halifax or B&B. However, do you think it’s worth placing the £3000 in now before April? Then if I do need any of it over the year (might need £1000 as deposit for a new car etc) I could take it from the ISA. And if I don’t, I will put some month’s salary back into the savings account.

Am still new to this whole saving thing, but am getting there... finally got rid of that student loan! :beer:

Any advice would be lovely

Cheers!

jem16

I presume you are a tax payer?

If so I would definitely put the whole £3000 into your cash ISA. The only difference between an ordinary savings account and the cash ISA is that you don't lose 20% of your interest to the tax man. You can take the money out when you want - you just can't put it back in again. For example if you put in £3000 and then took out £1000 for your car or whatever, you could not put back in £1000 as you have already used up your allowance for that tax year. However you would then be able to put in another £3000 after the 6th April.

should_save_money_newbie

Cheers,

So if after April I needed to take money out from the £3000 I’d put in this month, would I still be able to put in up to £3000 over the course of 12 months (April06 – April07)?

If so, would it make more sense putting a couple of hundred in every month instead of my banks savings account

:T

jem16

should_save_money_newbie wrote:

Cheers,

So if after April I needed to take money out from the £3000 I’d put in this month, would I still be able to put in up to £3000 over the course of 12 months (April06 – April07)?

Yes you would.

If so, would it make more sense putting a couple of hundred in every month instead of my banks savings account

:T

I would say that it would, unless you are able to put in a lump sum on April 6th. With the ISA you would get around 5% interest gross. With a savings account you may only get about 3.6% or less.