Barclays 6% savings

gkm_2

I've got one of the Barclays 6% regular savings accounts, and I think at the end of the year (Feb 2010) it turns into an ISA. I've already got an ISA with another bank and I'd like to know how I can get hold of the money in Barclays without paying tax on my savings and ultimately losing most of the interest I've gained? I know I can't pay into more than one ISA per financial year which is why I've held off paying anything into my existing ISA since April 09.

Baldur

gkm wrote: »

I've got one of the Barclays 6% regular savings accounts, and I think at the end of the year (Feb 2010) it turns into an ISA.

You need to check this, accounts do not normally 'turn into' ISAs, there is a specific process for ISA opening.

Milarky

gkm wrote: »

I've got one of the Barclays 6% regular savings accounts, and I think at the end of the year (Feb 2010) it turns into an ISA.

Untrue.

I've already got an ISA with another bank and I'd like to know how I can get hold of the money in Barclays without paying tax on my savings and ultimately losing most of the interest I've gained?

'Most' isn't accurate either. The 'most' you'd pay is 20% (or possibly 40%) of what is likely a lower gross rate anyway. You would not have less than half the resulting interest as a result. The main misconception in your post is the assumption the Barclays Regular Saver is 'ISA-able' when it's clearly not.

book12

The monthly saver will turn into an instant savings account, not an ISA. The instant savings account is called 'MoreForMore Savings'. It says so in their terms and conditions: http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?task=popup1group&value=14939&target=_blank&site=pfs See their website for more details on that instant savings account: http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?task=homefreegroup&value=16084&target=_self&site=pfs.

KTF

The rates on the account that it gets moved to are a joke. If they still have the 6% regular saver going in a few months when mine matures then I will open another one but move the matured funds someplace else.

shaf00uk

Any regular saving accounts are very misleading with the headline rates.

The actual rate for this account is 3.25% (gross) as you are drip feeding into the account. So the net is actually 2.60% (basic tax payer) or 1.95% (higher rate).

Still not a terrible rate but if you have a lump sum or a regular investment then put the money elsewhere e.g. this years Golden ISA account first - you can get up to 3.61% with the same bank. Once that allowance is used then start drip feeding into this account.

I've based my calculation on £3,000 investment (£250 x 12).

Oh also, it does not automatically turn into an ISA account - you need to fill in form, give you NI number etc so that tax is not taken out of account.

greenface

OP did say (I)nstant (S)avings (A)ccount i think thats the confusion often abbreviated or thought thats what it meant

Essex123

shaf00uk wrote: »

Any regular saving accounts are very misleading with the headline rates.

The actual rate for this account is 3.25% (gross) as you are drip feeding into the account. So the net is actually 2.60% (basic tax payer) or 1.95% (higher rate).

I don't see how the rate is misleading. You get 6% on the money you invest for the time it is in the account. So the first month you can get 6% on £250, the second 6% on £500 and so on. The interest paid is calculated in the same way as on any other account.

It's your calculations which are misleading!

atypical

shaf00uk wrote: »

The actual rate for this account is 3.25% (gross) as you are drip feeding into the account. So the net is actually 2.60% (basic tax payer) or 1.95% (higher rate).

Are you not neglecting the interest gained on the account you're drip feeding from? That £2,750 whilst it's not sitting in the regular saver earning 6% is earning X% wherever you've got it.

It's something the regular savings calculator takes into account.

shaf00uk

atypical wrote: »

Are you not neglecting the interest gained on the account you're drip feeding from? That £2,750 whilst it's not sitting in the regular saver earning 6% is earning X% wherever you've got it.

It's something the regular savings calculator takes into account.

My comparison is based on other saving accounts where you can save as much money as you want (anything from £1 to £2,000,000) without restriction.

Of course, you will be earning interest from the account where you are shifting the money from. The more interest that pays, the less of a gain you will make by using the reg saver.

I know it can be confusing. Using the regular saving calculator you can obtain a similiar answer; £250 per month, 6% int, 12 months, no tax = £96.63 interest.

£96.63/£3000 x 100 = 3.22% (gross).

opinions4u

shaf00uk wrote: »

I know it can be confusing. Using the regular saving calculator you can obtain a similiar answer; £250 per month, 6% int, 12 months, no tax = £96.63 interest.

£96.63/£3000 x 100 = 3.22% (gross).

The average balance across the year in your example would be somewhere pretty close to £1,600.

£1,600 x 6% = £96.

If you saved the balance, an average of £1,400 across the year, in an account earning 3%, then you would be able to add £42 to the £96 and get a total return of £138 (£110 after basic rate tax). £138 on a £3,000 sum is 4.6%.

£3,000 in a 3.5% ISA would give you £105.

£3,000 in a savings account paying 3.5% would give you £84 after tax.

Where I come from £138 and £110 equate to more interest than £105 or £84.

What you need to price in is "am I ok with the restrictions on access?" and "can I be bothered?". Yes to both for me.

Regular savers usually offer a fixed rate too. So understanding the upside and downside of that helps.

The other factor would be the unquantifiable future benefit of piling the money in to an ISA each year instead. But you can do this on maturity of a regular saver account anyway, so you can maximise the value of both.

Any regular saving accounts are very misleading with the headline rates.

Is a provider meant to advertise the rate in a way that breaks FSA rules and attract a fine? They don't mislead in any way shape or form. You get a rate equivilant to what it says on the tin for the period of time that money is in there. To suggest otherwise is bizzare.

I know it can be confusing. Using the regular saving calculator you can obtain a similiar answer; £250 per month, 6% int, 12 months, no tax = £96.63 interest.

Try using the "dripfeed" option on the tool and see what answer you get.

http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#savingscalc