ISA or Savings

[Deleted User]

I had a fixed rate ISA at 6% with £10,000 in it. The term ended in April when it reverted to a 2% ISA.

I have a savings account fixed at 5% until December.
The top paying ISAs are at 3% or 4%(locked in for 4 years)

If I transfer the £10000 to the savings account I earn about £100 more interest in a year but I lose 3 years worth of ISA allowance.

Any suggestions?

Thanks

Lokolo

The 5% is before tax yes? That means it goes to 4% after tax....

opinions4u

Unless you're planning to spend the money, stick with the ISA. The long term benefits should outweigh a short-term gain by moving the funds to a "normal" savings account.

You should be able to fix at 3% or more - so if you're rate is lower consider transferring to a better paying provider.

I like the Halifax Reward ISA which accepts transfers in and allows withdrawals and you could check out www.moneysupermarket.com/savings to see what other providers offer.

Money_Grabber13579

dotcottondotcom wrote: »

I had a fixed rate ISA at 6% with £10,000 in it. The term ended in April when it reverted to a 2% ISA.

I have a savings account fixed at 5% until December.
The top paying ISAs are at 3% or 4%(locked in for 4 years)

If I transfer the £10000 to the savings account I earn about £100 more interest in a year but I lose 3 years worth of ISA allowance.

Any suggestions?

Thanks

Umm.... Is the account a fixed rate bond? If so you won't be able to transfer any more money into it, and 5% accounts just don't exist today for new customers. (Except regular savers, which aren't really 5%!) I'd say stick with the ISA as if you take it out, you've lost your allowance forever.

opinions4u

Money_Grabber13579 wrote: »

Umm.... Is the account a fixed rate bond? If so you won't be able to transfer any more money into it, and 5% accounts just don't exist today for new customers. (Except regular savers, which aren't really 5%!) I'd say stick with the ISA as if you take it out, you've lost your allowance forever.

Halifax offered a Web Saver Reward in November/December last year paying 5% fixed for a year and allowing additional deposits.

RayWolfe

Money_Grabber13579 wrote: »

(Except regular savers, which aren't really 5%!)

Of course they are!

opinions4u

RayWolfe wrote: »

Of course they are!

I was too tired to take that one on last night!

Money_Grabber13579 wrote: »

Umm.... Is the account a fixed rate bond? If so you won't be able to transfer any more money into it, and 5% accounts just don't exist today for new customers. (Except regular savers, which aren't really 5%!) I'd say stick with the ISA as if you take it out, you've lost your allowance forever.

Look, get this straight once and for all. These accounts have to quote an AER and the AER they quote is accurate.

The funds, for the period of time that they are in the account, are earning the rate quoted. The funds, while they are not in the account, are earning interest at whatever rate they qualify for in a feeder account / current account or whatever.

REGULAR SAVER ACCOUNTS DO EARN THE RATES THEY QUOTE!!

Here's a linky to the main site that may help explain this to you slightly better.

natman

dotcottondotcom wrote: »

I had a fixed rate ISA at 6% with £10,000 in it. The term ended in April when it reverted to a 2% ISA.

I have a savings account fixed at 5% until December.
The top paying ISAs are at 3% or 4%(locked in for 4 years)

If I transfer the £10000 to the savings account I earn about £100 more interest in a year but I lose 3 years worth of ISA allowance.

Any suggestions?

Thanks

Hi I have just been through the same debate in my head at the start of April.
I had a 6% ISA with £8000 which ended in Aprl 2009, it went down to 1.5%, I contemplated fix term bonds at 4.2%, regular saver at 4 - 6% (halifax and Barclays)

I then decided to get my tax free savings earning a decent rate (in todays environment) as Long term having say 20k in tax free savings is better than a short term higher interest account.
I opened up the Halifax reward ISA at 3%, can transfer in and add new funds. You would have to earn around 4% in an other account to get a similar return, but if you took out you tax fre savings you could never get it tax free in the future.

In addition I opened up a Halifax regular saver at 4%, you can save up tp £500 a month, so I am dead happy.
One of the best instant access accounts I have just opened is 2.65% at capital one...... http://www.capitalonesavings.co.uk/FlexiSaverAccount.asp.

So yeah, I would for sure invest in ISA, and any spare money decide if you can tie it up a bit or need it instantly.
Happy saving

opinions4u

natman wrote: »

So yeah, I would for sure invest in ISA, and any spare money decide if you can tie it up a bit or need it instantly.
Happy saving

While most of what you say is right, the OP would be better using either the Barcays Monthly Saver thing (6%) or topping up their existing 5% account for any additional funds at this point in time (assuming they are a basic rate taxpayer).

Then, when that 5% account expires in December, reviewing the whole situation. That would be the point to top up an ISA paying around the 3% mark using this year's allowance.

natman

opinions4u wrote: »

While most of what you say is right, the OP would be better using either the Barcays Monthly Saver thing (6%) or topping up their existing 5% account for any additional funds at this point in time (assuming they are a basic rate taxpayer).

Then, when that 5% account expires in December, reviewing the whole situation. That would be the point to top up an ISA paying around the 3% mark using this year's allowance.

Yeah I agree with opinions for you, however some of the ISA's are being pulled, and I know deep down in 5 months time or so, there will be some comparable products. I suppose I am happy with my ISA earning 3% at present.
Yeah the Barclays regular saver is the best regular regarding interest rate at 6%, I have tried opening one for the last 3 weeks, but you have to go in Branch. I went in Branch to see an advisor and all they wanted to talk about was insurance products and bank accounts and kept moving me away from regular saver, so I left. The halifax you can open online and save up to £500, where the barclays it is £250.
My intention was to place £250 a month in barclays and £250 in Halifax, but Barclays left me very frustrated.

johncolescarr

I've always been a big ISA fan and I still am, but I have recently decided that in the current savings market it is sometimes better for tax payers to gain the better rates from basic savings accounts (if this is a true statement at that time) so long as you move this money into an ISA before the end of the tax year. I am doing this by holding £2500 in my A&L 5% current account rather than putting it straight into an ISA (paying 3%). Of course, I transfer my existing ISA protected funds into a higher paying ISA, but at the end of the (tax) year, if I still havent filled it up, then I will transfer the money held in my A&L account to my ISA.

The important message is make sure you use your ISA allowance each year, so that tax free interest earnings can be compounded in the future. But if you can earn a few more quid that year by temporarily holding your cash in a normal savings account, why not?