Understanding ISA's

csa

Sorry this is going to sound quite thick to most of you, but I've got a mini cash ISA with just over £3000 in it. I've tried going onto the forums and websites about ISA's but I'm still confused about them. Can anyone simplify them for me? I'm trying to view my ISA as a long term savings account, however there are times when I do dip into it.

1. Should I be doing anything with my money once it reaches over £3000?
2. What if I take some money out during the year so it falls below the 3k so it might be short of the tax free savings by the designated date?
3. A&L are offering a Direct ISA which has a better AER, as a A&L customer, should I be thinking of changing?

Use baby language please. Thanks

dunstonh

1. Should I be doing anything with my money once it reaches over £3000?

No.

2. What if I take some money out during the year so it falls below the 3k so it might be short of the tax free savings by the designated date?

It doesnt work that way.

3. A&L are offering a Direct ISA which has a better AER, as a A&L customer, should I be thinking of changing?

The higher the better.

The £3000 cash ISA allowance is a contribution limit per tax year. Come April 6th, you get a brand new £3000 allowance. It doesnt matter what the balance goes to. If you pay £3000 in and draw £1000 out, you cannot pay any more money in until the following tax year when you get another £3000 allowance.

elizw

think of each mini cash ISA as a money box that holds £3000 - and you can get another one (and only one) each tax year.

You can put in any amount up to £3000 but you cannot put back any you take out of it.

You can add to the same ISA each year or get a new one (some providers pay more interest if you keep adding to the same one.



You can ask any ISA provider to look after it for you and, you can ask them to give it to another ISA provider if you want to (but you cannot hold it yourself)

You are free to move it about between providers to get the best rates. (check their terms and conditions first)

Good nice and safe (Government backed) ISA now is National Savings at 5.05%

Murtle

to move it - you need to TRANSFER it NOT withdraw it and pay it into a knew one.

This is important otherwise you will withdraw a previous years tax free savings and will use up this years tax free savings with the same money.

I hope that is clear??!

Have a read of this it's written clearly

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1077487692,12362