Savings Account Advice Needed

mountainofdebt

For Junior really!

He's got himself a part-time job so we've suggested that he puts part of his wages into a savings account.

He will be earning about £70 per week, and at the moment doesn't have a real need for the money.

Plan A is to join the Armed Services straight after 6th form although if that doesn't come off and he needs to resort to Plan B ( ie go to Uni in September) .....even if Plan A comes off it looks increasingly likely that there will be a gap of a couple of months in between doing A levels and actually joining.

He also has £600 to kick start the account with.

macman

Is Junior 18 yet? If so a cash ISA is the obvious choice, as all the income will be free of tax. You could look at a fixed or variable rate ISA.

mountainofdebt

Yeap he is 18.

Would he be able to get access to the cash with an ISA? Just thinking that if he does go to Uni then having access to the cash may be useful....though at the mo, if he had to activiate Plan B then he may still be able to carry on with his job as the Uni he wants to go to is the local one.

ses6jwg

Yes he will.

Currently best instant access isa is Santander 2.85% and he can have a cash card for it if he desires.

opinions4u

ses6jwg wrote: »

Yes he will.

Currently best instant access isa is Santander 2.85% and he can have a cash card for it if he desires.

Although luring the young and innocent in to a Santander world of madness is cruel!

juicyjude

Yes opinions4u I agree with your statement ha ha!

Lokolo

http://www.halifax.co.uk/savings/accounts/cash-isas/isa-direct-reward/

If you want something a little less but a lot less hassle :P

macman

mountainofdebt wrote: »

Yeap he is 18.

Would he be able to get access to the cash with an ISA? Just thinking that if he does go to Uni then having access to the cash may be useful....though at the mo, if he had to activiate Plan B then he may still be able to carry on with his job as the Uni he wants to go to is the local one.

Yes, but once you withdraw ISA funds, the tax free aspect is loss forever-you cannort reinvest it in an ISA for that year. ISA funds should be seen as long term savings.

elektra

macman wrote: »

Is Junior 18 yet? If so a cash ISA is the obvious choice, as all the income will be free of tax. You could look at a fixed or variable rate ISA.

Don't forget that a non-ISA account can pay just as much interest (if not better) to a non-taxpayer.

If he chooses something like the Santander or Halifax account above he should register for gross interest. EDIT : IGNORE THIS SENTENCE - JUST REALISED SANTANDER and HALIFAX ACCOUNT MENTIONED ABOVE ARE ISA'S

jimjames

elektra wrote: »

Don't forget that a non-ISA account can pay just as much interest (if not better) to a non-taxpayer.

If he chooses something like the Santander or Halifax account above he should register for gross interest.

For ISA accounts interest is already paid tax free so you can't register to get tax back on it.

The total he will earn at £70 pw is £3640 py which is comfortably below the cash ISA limit of £5100. Even if he draws money out routinely he will still be able to top it back up again and gets a new limit of £5100 in April so in this case I don't think it really matters whether it is considered long term or short term savings.

elektra

jimjames wrote: »

For ISA accounts interest is already paid tax free so you can't register to get tax back on it.

I know that, which is why I reminded to register for gross interest if he chose the Halifax or Santander account. SEE MY EDIT

A non-isa account would be ok for him at the moment as he is not earning huge sums and maybe dipping into the money.

EDIT: apologies Jimjames I had not clicked on the HALIFAX link to see if was an ISA and did not see the word (ISA) in the Santander sentence.