Savings account, large deposit, 1 withdrawal in a year?

pph

Hi, we have the money for a deposit but jobs are shakey so want to tuck it away until we are sure. That could be in 4-6 months so don't want to put away for a year.

Is there a good interest rate savings account for a which can take a large lump sum and let me take it out if needed? I only need one withdrawal.

Cheers!

Lokolo_2

How about putting it into an instant access savings account, that sounds like the best option considering you can't keep it locked up for longer than 6 months.

The highest paying one is by The AA http://www.theaa.com/savings/savings_calculator.jsp @ 2.8%

This is not a bad rate considering it's instant access, no penalties for withdrawals like you would have with fixed term bonds. :j

rb10

Or Halifax Web Saver Extra, allows one withdrawal per year, pays 2.8% if you have a current account.

Really quick & easy to open if you've already got Halifax accounts - takes about 5 minutes.

pph

Thanks guys, exactly what I am after. Any more are welcome but that's great.

peterbaker

How big is the deposit? You say "we", so if you haven't used this years ISA allowances then between a couple you could invest £10200 taxfree and with some cash ISA accounts that is also truly instant access (maybe don't choose Santander however based on recent criticisms on MSE!). Maybe there are still one or two cash ISAs out there on daily interest accrual that make no interest penalty for the withdrawal.

If you pay tax at 20% then instant access cash ISAs paying more than 2.25% taxfree beats the AA's instant access 2.8% gross. If you pay tax at higher rate then you of course would do even better with a (taxfree) ISA.

Can anyone name a cash ISA that would fit the bill or have the rates for those all dropped off a cliff also??

Lokolo_2

peterbaker wrote: »

How big is the deposit? You say "we", so if you haven't used this years ISA allowances then between a couple you could invest £10200 taxfree and with some cash ISA accounts that is also truly instant access (maybe don't choose Santander however based on recent criticisms on MSE!). Maybe there are still one or two cash ISAs out there on daily interest accrual that make no interest penalty for the withdrawal.

If you pay tax at 20% then instant access cash ISAs paying more than 2.25% taxfree beats the AA's instant access 2.8% gross. If you pay tax at higher rate then you of course would do even better with a (taxfree) ISA.

Can anyone name a cash ISA that would fit the bill or have the rates for those all dropped off a cliff also??

Just my opinion, but I think that depositing money into an ISA for such a short term isn't worth it, maybe the OP and their partner wish to still use their ISA allowance after they move into their new house

As we know it's not good to withdraw from an ISA as that part of the deposit is then no longer in the tax-free ISA wrapper and can't be re-invested

Also worth noting, but depending on the provider, it may take longer to open an ISA than an Online instant access account because of the increased paperwork and ID verification checks, as I said it depends on the provider.

peterbaker

Well if it's a deposit for a property in 6 months, and they haven't already used the 2010/11 ISA allowance, then after the 1 withdrawal is made and the property is bought, they ain't a gonna have to wait too much longer for next year's allowance to become available (6 April 2011) if they then wish to start saving anew and to invest longer term in such things as taxfree ISA's. We are afterall, nearly 4 months into 2010/11 allowance period already, and I am sure if it is a property bargain they are hoping to grab, then any spare cash after that ain't likely to be saved for a month or two at least, until they are well settled in ... but point taken ... you pays yer money/takes yer choice.

As for "it's not good to withdraw from an ISA", well if you weren't going to use this year's ISA allowance anyway, then absolutely nothing is lost, is it, no matter what words you wrap it in?

With some providers I think it might actually slightly faster to open a new cash ISA than any other account so long as the parties can both attend and make sure they know their NInos in addition to the normal ID, but that is not to say all providers are slick. Few are in my experience!

pph

peterbaker wrote: »

How big is the deposit? You say "we", so if you haven't used this years ISA allowances then between a couple you could invest £10200 taxfree and with some cash ISA accounts that is also truly instant access.

If you pay tax at 20% then instant access cash ISAs paying more than 2.25% taxfree beats the AA's instant access 2.8% gross. If you pay tax at higher rate then you of course would do even better with a (taxfree) ISA.

Hi, we have both used maximum allowance and I am a higher rate payer, while she is not. (She only just isn't and I only just am). Does that change anything?

Thanks!

Reaper

pph wrote: »

Hi, we have both used maximum allowance and I am a higher rate payer, while she is not. (She only just isn't and I only just am). Does that change anything?

Then if you trust her put the whole savings account in her name. If it is in your name you will have to pay additional tax. Provided the interest earned does not take her over into the higher rate tax bracket unlike you she will have no additional tax to pay.