Short-term savings options

cptncanary

I'd really appreciate some advice on scraping as much as possible from my savings options:-
I have a sum of £2,500 in an A&L ISA, which is at 1.1% at the moment, which was deposited in 2008/09 tax year;
I also budget monthly for the annual outgoings, car service/ insurance, house insurance, road tax etc., as well as school termly costs, school fees, dance/ music lessons, etc.
I put all this cash into the AA Savings Internet Saver, which is giving me 1.84% at present.

As I need regular access to the cash in the AA account, there's no point in using a fixed, higher rate savings account or ISA.
What I need help with is, is it better to use my 2009/10 ISA allowance to deposit the cash in the ISA on a monthly basis, or continue using the AA account?

the_annoyed_customer

It is better to use an ISA and put it in month after month as you are getting a bad deal at the moment. Look at Barclay's golden ISA it pays 3.61% but will drop to 2.61 next year. RBS and Natwest (same company) offer 3.51% but the RBS version does not accept transfers. Or finally for the top three ISA's at the moment is the Abby which pays 3.50% but drops a huge 2% next year. IF that does not tempt you and you want to keep your money open try the ING or Akbank savings accounts both pay 2.75% but ING has a small bonus until June 2010. Then there is Alience and Leicester, Abby, Tesoc and Egg all paying 2.50%, but all have bonuses on them.

apt

The first thing you should do is transfer the A&L ISA to something better - e.g. Natwest E-isa at 3.25% or Halifax Direct ISA Reward at 3% fixed for a year. You can get a higher rate than the AA account, but if money is going in and out and the balance is fairly low it might not be worth changing.

ben37564

ISAs a definitely the best account for smaller savings as they're tax free but that doesn't mean you can shop around for the highest ISA rate. Moneyfacts.co.uk shows Barclays are offering 3.55% for an instant access ISA.

rb10

the_annoyed_customer wrote: »

Look at Barclay's golden ISA it pays 3.61% but will drop to 2.61 next year. RBS and Natwest (same company) offer 3.51% but the RBS version does not accept transfers.

Both these accounts have variable interest rates, so they are likely to drop their rates very soon. Barclays' ISA will drop a further 1% (beyond wherever it's got to in a year's time) in one year from now.

G_M

The first thing you should do is transfer the A&L ISA to something better

Yes, but the key word is 'transfer' Do NOT withdraw the money and use it to open a new account. Go to the new bank and complete a transfer form - they will arrange the transfer. That way you keep the ISA entitlement.

cptncanary

G_M wrote: »

Yes, but the key word is 'transfer' Do NOT withdraw the money and use it to open a new account. Go to the new bank and complete a transfer form - they will arrange the transfer. That way you keep the ISA entitlement.

Gotcha, message understood :beer:

cptncanary

I guess I could make the £2,500 work a little harder, by using it to make mortage overpayments, but pulling it back down, before my current mortgage deal finishes?