Monthly or annual interest help!!!

Cumberland_Sausage

Hi, I'm new on here and just starting to get to grips with my finances! I have an ISA at the moment I have not started to pay into it yet in this tax year. I want to move it to a higher paying isa, possibly a 1 or 2 year fixed interest rate. I have found a few that I may choose but just wondered which is the better option to go for monthly interest or annual interest? I may be being a bit stupid(!) but I can't figure out which is best.

Also do I move the whole ISA or just open another one?

Any answers much appreciated!
:beer:

Baldur

If you select a new provider that pays a better rate and accepts Cash ISA transfers, you simply complete their ISA transfer form and they then arrange the transfer for you - you must not do it yourself if you wish to retain the tax-free status.

ISA transfers have no effect uon your annual ISA allowance, so you could open & subscrie to a new Cash ISA as well as transferring your old one.

As far as monthly/annual interest is concerned - if the AER is the same for both types, then any difference is likely to be minute.

Cumberland_Sausage

Thanks...I think what I am having difficultly getting my head around is that I am under the impression the isa is a continuous thing. Is each year like a separate account?
So basically what you are saying is I can transfer my 2008/2009 isa to a new provider anyway even if that is all I do, to take advantage of a better rate? Then I can set up another 2009/2010 isa elsewhere or with the same provider.
Sorry to be so ignorant!:o

adambro

I'd generally go for monthly interest if there is a choice and if it is the same AER because I find it encouraging to see my money building month by month.

Baldur

Cumberland_Sausage wrote: »

Thanks...I think what I am having difficultly getting my head around is that I am under the impression the isa is a continuous thing. Is each year like a separate account?

You could pay each tax year's allowance into the same account, but you'd probably soon find the interest being earned dwindling away to nothing.

You can open & subscribe to a new Cash ISA each tax year so, theoretically, you could currently have a different Cash ISA account for each tax year since the scheme started in April 1999 (probably a bit of a nightmare keeping track, though) - hence the ability, through the transfer process, to consolidate accounts, if you wish to do so.

So basically what you are saying is I can transfer my 2008/2009 isa to a new provider anyway even if that is all I do, to take advantage of a better rate? Then I can set up another 2009/2010 isa elsewhere or with the same provider.

That's correct.

Cumberland_Sausage

Thanks! Last question (I promise!) If i did leave my ISA in the same place, and just added this years allowance to it - you say the interest would dwindle away...does the interest you get generally decrease then?

Lokolo

Cumberland_Sausage wrote: »

Thanks! Last question (I promise!) If i did leave my ISA in the same place, and just added this years allowance to it - you say the interest would dwindle away...does the interest you get generally decrease then?

Because banks decrease rates overtime in savings accounts. Then bring out new ones with higher rates. People then can't be bothered moving the money so the bank wins.

(Sorry if you wanted this one Baldur, I am getting withdrawal symptoms!)

Cumberland_Sausage

Thanks! I feel more in the know now!

Baldur

Lokolo wrote: »

(Sorry if you wanted this one Baldur, I am getting withdrawal symptoms!)

You're having withdrawal symptoms & I'm trying to give up...........