Best interest on a years savings

juliesutcliffe

Does anyone know which would earn me more interest on my savings:
a) £50 a month in my HSBC cash ISA account at 5.25%
or
b) £50 a month in a Halifax Regular saver earning interest at 7.07% AER

RubberDucky_3

Is this a trick question?

Depends on your tax rate....

johnllew

It depends on your tax rate. If you pay tax at the basic rate, then the ISA is equivalent to 6.5625% gross, less than the Halifax rate. If you pay tax at 40%, the ISA is equivalent to 8.75%, better than the Halifax.

Walletwatch

At the risk of repetition (as has been quoted in a number of such posts), one aspect that cannot be valued too easily is the fact that your ISA entitlement, once lost cannot be utilised again, so you cannot carry forward the benefit of adding to your tax-free corpus in the form of your ISA. Make a note of this, and assign an appropriate premium to your ISA accordingly when you make a decision between an ISA and a non-ISA.

juliesutcliffe

Not A trick question. I pay no tax so I don't really benefit from a tax free cash ISA, although now the children are growing up I will be paying tax probably in a couple of years. I want to save for a year and then transfer the funds. I guess the best thing to do would be to save in the Halifax regular savings account then when the years up to transfer to the cash ISA. I know it sounds like a piddly amount but you have got to start somewhere and it is better than being in debt.

Walletwatch

Go for it, Julie