Regular Mini ISA 2006-07

houmie

Hi,

On 28th March I have opened an A&L Direct Mini Isa and transfered £3000 on it on the same day.

Now I still have another £3000 limit for 2006-07. I was thinking of going for a £250 regular Mini ISA. But what would be the best solution for me?

I couldn't find any link that is discussing this option.

Many Thanks
Houmie

Milarky

Are you asking because you don't want to commit £3000 from day one and need to save out of salary etc?

The best of the batch for some time has been the Scarborough Building Society at 6% for regular saving of up to £250 per month. It's called 'My Savings' and is available as a taxable RS account (so you could have that plus an A&L or other ISA in 2006-07) OR as a free standing ISA. The nice thing about this is that although the rate is not guaranteed it is tied to their regular saver rate - the ISA is just a 'wrapper'. Regular saver rates tend to be the best offered by each provider so that as long as the Scarborough remains generally competitive that ISA rate is not suffer much either. Compare that with your A&L which although an excellent rate - and instant access - is hedged around with questions about the rate in future. A&L have brought out a lot of 'new' accounts lately and quickly retired 'old' accounts wirh lesser terms.

Anyway the Scarborough's details are here:

http://www.scarboroughbs.co.uk/savingsandinvestments/products/my_savings.html

david78

There's this 8% one from the portman

http://forums.moneysavingexpert.com/showthread.html?t=178170

houmie

Doesn't portman make you pay a fee for transfers? That would make it useless though right?

houmie

Milarky wrote:

Anyway the Scarborough's details are here:

http://www.scarboroughbs.co.uk/savingsandinvestments/products/my_savings.html

Hi Milarky,

This is correct I would like to save up probably 3 x 250,- a month. I still have my 3000,- allowance for 2006-7.

I was thinking opening a Premier Current Account with A&L in order to use their 10% Regular Saving. That would be my first 250,-.

The second 250,- shall go in Halifax regular saving for 7%?

And the last 250,- in Scarborough's for 6%?

The question is now, can I wrap my ISA allowance around the A&L 10% without having to pay the tax and get the full 10%? Or is my only possibility the Scarborough's ISA regular saving for 6%? I don't like Portman because of the transfer fee. These fees turn me totally off.

Would that be a good way to save up 750,- a month? Any better suggestion?

Many Thanks
Houmie

masonic

houmie wrote:

Would that be a good way to save up 750,- a month? Any better suggestion?

I think the answer to that question depends on whether you have more savings sitting around now, or whether you are really planning to source all of the money from your income over the next 12 months.

If you have a sum of money in Savings Account A that you wish to feed into Regular Saver B, then it is generally only worthwile if [Net Rate(A)+Net Rate(B)]/2 is better than the rate that could be achieved elsewhere.

For example, if you had £3000 sitting in an ING Direct account paying 3.6% after tax and paid £250pcm into the Scarborough 6% Regular Saver ISA, then you would earn approx. 4.8% total interest after tax, compared with 5.2% if you paid it all into your A+L ISA now.

Milarky

houmie wrote:

The question is .. can I wrap my ISA allowance around the A&L 10% without having to pay the tax and get the full 10%?

The answer to that is 'no' I'm afraid. The A&L account is definitiely not an ISA. The one I mentioned is a 'dual' account (i.e. has the ISA option) but I haven't seen any others like that. And I've noticed since then that you can only hold a single 'My Savings' account - not one of each type.

There is nothing to stop you crediting your A&L ISA in 2006-07 at a monthly rate (even though you could pay in £3000 in one go) so as to benefit from that rate whilst also going to the Scarborough for a taxable regular 'My Savings'. The reason I suggest that is the flexibility you retain for the smallish loss of interest. If you treat your A&L as though it were RS you aren't committed to paying in any particular month and you aren't restricted from putting in the balance of £3000 at any time if you become flushed. Likewise if you only 'commit' to £10 regular savings at Scarborough you can keep access to the option to top that up at the rate of £250. In fact the rate differential* is only 0.8% (of a maximum average balance of £1500) which is 0.4% of £3000 or £12. To get an extra £12 from the A&L compared to saving £250 into it each month you'd just need to put an extra £230 in there in the first month (thus: £480 into A&L ISA in April) and £250 for 10 months then £20 (£230 less) in the final month and you would earn the same amount of ISA interest in that year as in the Scarborough. In year two, of course you would have £3000 in the Scarborough as well so the extra added/taken away would need would be 3 times as much because the Scarborough 'ISA' would be running £36pa 'ahead' of the A&L one on a like for like paying in basis.

Apologies. It is a bit complicated but the key point was to retain 'flexibility' - which also comes at the cost of being more complicated to manage of course!

*I mean that A&L pays 5.2% and Scarborough 6% on ISAs

houmie

Milarky wrote:

The answer to that is 'no' I'm afraid. The A&L account is definitiely not an ISA. The one I mentioned is a 'dual' account (i.e. has the ISA option) but I haven't seen any others like that. And I've noticed since then that you can only hold a single 'My Savings' account - not one of each type.

There is nothing to stop you crediting your A&L ISA in 2006-07 at a monthly rate (even though you could pay in £3000 in one go) so as to benefit from that rate whilst also going to the Scarborough for a taxable regular 'My Savings'. The reason I suggest that is the flexibility you retain for the smallish loss of interest. If you treat your A&L as though it were RS you aren't committed to paying in any particular month and you aren't restricted from putting in the balance of £3000 at any time if you become flushed. Likewise if you only 'commit' to £10 regular savings at Scarborough you can keep access to the option to top that up at the rate of £250. In fact the rate differential* is only 0.8% (of a maximum average balance of £1500) which is 0.4% of £3000 or £12. To get an extra £12 from the A&L compared to saving £250 into it each month you'd just need to put an extra £230 in there in the first month (thus: £480 into A&L ISA in April) and £250 for 10 months then £20 (£230 less) in the final month and you would earn the same amount of ISA interest in that year as in the Scarborough. In year two, of course you would have £3000 in the Scarborough as well so the extra added/taken away would need would be 3 times as much because the Scarborough 'ISA' would be running £36pa 'ahead' of the A&L one on a like for like paying in basis.

Apologies. It is a bit complicated but the key point was to retain 'flexibility' - which also comes at the cost of being more complicated to manage of course!

*I mean that A&L pays 5.2% and Scarborough 6% on ISAs

Wow, it is indeed complicated. You seem to be really good with numbers; I have right now £3300 on my account. But if I put £3000 into an ISA account straight away, I would be broke. hehe

Thats why I thought leaving the £3300 in my current account and save up from now from my salary up to £700 a month. Since you are a calculation guru, you might see an advantage in investing this sum of money differently rather than 2 to 3 times £250 a month RS.

What do you recommend?

Thanks
Houmie

houmie

scarboroughbs only opens an account in person at branches, but they seem not to have any branches in London. How is that possible?

Speculator

You can open any account with the Scarborough by post.