What type of savings

carlih1

Hi

im very exctied but as part of my settlement from Halifax i have £1000 to put into savings, i was thinking of an isa i can top up every month but now barclays and alliance and leicester have 10% savings would this be a better option for this amount of money, i am thinking of putting in £100 a month on top of this.

Does anyone have any suggestions, i have never had any money to save before?/

Carli

baldbloke_2

With a maini-cash ISA you will receive tax free interest of say 4.5%+ which will be available to you at an attractive rate until at least 2010 when ISAs might change/end/???

With the high interest accounts offered by various banks and some building societies you will need to be opening & closing current accounts & the linked savings accounts at regular intervals as the attractive introductory rates appear and then disappear. If you don't mind that then it is difficult to argue against 8% to 10% as offered. But in truth it doesn't seem a manageable longer term strategy.
The best of the Cash ISAs are really unbeatable and because it is so easy to transfer your accumulated ISA savings between providers you will not easily miss out on a very good rate and without any hassle.
Good luck. Whatever you decide - just keep saving something regularly with as little trouble to you as possible. The warm glow afforded by a healthy savings balance is a truly good feeling!

Kazza242

carlih1 wrote:

Hi

im very exctied but as part of my settlement from Halifax i have £1000 to put into savings, i was thinking of an isa i can top up every month but now barclays and alliance and leicester have 10% savings would this be a better option for this amount of money, i am thinking of putting in £100 a month on top of this.

Does anyone have any suggestions, i have never had any money to save before?/

Carli

I would say definitely opt for a mini cash isa. The regular savings accounts with headline rates, such as those by Barclays and A&L, are not as good (in the long-term) as a mini cash isa, in my opinion. This is because these regular savers only run for 1 year and only allow a very limited sum of money to be deposited each month. Once the total for the year is in the account, it is swept out into a lower paying account, therefore the benefit is rather limited.

A mini cash isa, on the other hand, does allow you to benefit from compound interest i.e. each year you earn interest on your interest, as well as on your capital. Added to that the interest is tax free too.