Tips for newbie saver. Any help gratefully received!

Charlieh

Hello there.

My situation is:

I have the majority of my savings in an ISA with Natwest at the moment. I know the rate is terrible, but it's online and easy as I have my current account with them too. I should really change to a better one but unsure of a few things.
-according to the website - the santander one or the Halifax one looks good as I could transfer what I have NOW into them...

a) is transferring easy?
b) will I get penalised in any way for doing so?
c) It is January, the tax year runs out in April, if I move the money across now, will I only get this good rate until April and then have to move it again to a better one?

more general questions:

d) Is the 2.8% rate or whatever it is, 2.8% of your total ISA savings paid into your account each month? e.g £3000 in an ISA, 2.8% = £84 so £84 is paid into your ISA. Is that how it works?

e) If I reach my ISA limit on this account before April, should I wait until AFTER April to open a new one? Can I do this? I know I can have more than one but, how many?

f) When should I open new ones or transfer over things etc etc? I think I'm a bit confused about timings.

finally- and sorry about all this. The website itself is brilliant but i'm struggling slightly with the specific banking vocab and require a bit more explaining to to understand fully.

g) I have just opened a First Save account which is locked away for one year. This isn't an ISA of course, but a regular savings account with a high rate that is locked away. How much tax will they take from this? And will the rate, think it's 2.9% or so, cover the amount taken from the tax man?

So sorry about all this. If you know the answer to just one question and can be bothered to answer I would be so grateful indeed. Thankyou so very much

Charlie

Newbie2saving

Don't give banks your business if they aren't rewarding you with the best rates, move your money elsewhere, your money and you've earnt it so make it work as hard as possible to give you the most back (I know as I wasn't saving savvy until past couple of years and realised I needed to keep on top of interst rates).

This is a good page on the MSE site that explains ISA's in detail http://www.moneysavingexpert.com/savings/best-cash-isa Also at the top of the savings forum is a ISA page which answers a lot of similar questions you've had. Here's the link http://forums.moneysavingexpert.com/forumdisplay.php?f=18

I know this doesn't answer all your questions, but hope it helps cover a few!

Good luck.

psychic_teabag

a) yes, transferring is easy. If you take the paperwork for your existing ISA into a branch of the new provider, they will help you through the process. (Or fill in a form and post it to them.) The nice thing about the Halifax one is that if there's a delay in transferring, Halifax will give you interest from the day you apply - most providers will wait until they actually receive the money from the old ISA which can take several weeks.

d) You get 2.8% per year. If the account pays monthly then you'd get £7 per month.

e) Yes, you should wait until April 5th before opening another account. I believe that you can open a new account in the same financial year, but you can't pay any money into it, so it would be a bit pointless (unless you are doing so in order to capture a good interest rate but don't intend paying into it until next year, or something like that). But best to keep life simple and wait until next financial year before opening another one.

You don't have to open a new one next year, you can just add more to the existing one (depending on the T&C of the one you transfer to - if it's instant access, you can add more, if it's fixed-term, you probably can't add more)

f) Transfer as soon as you notice you're not getting the best available rate (assuming your existing account is instant-access or has already reached maturity date if it's fixed). You can open an account any time you like, as long as you have not already paid money into any cash ISA already that tax year.

Note that there tends to be a flurry of activity in March/April - providers might boost rates to attract savers who have not yet opened an ISA by the end of the year, or to catch the early birds at the start of the next financial year)


g) By default, institutions pay you the net amount after basic-rate tax is deducted and give the rest to the tax man. So if 2.9% is the "net" rate, then yes, that takes into account the tax deductions and you have nothing more to worry about (unless you are a non-taxpayer or a higher-rate taxpayer). But if 2.9% is the "gross" rate, you will actually only receive 2.3% or so. If you are a non-taxpayer, you can ask for the money to be paid gross. If you are a higher-rate tax payer, you must declare the interest on your tax return and pay an additional 20% on it.