Compensation cheque recieved - Where to put it?

nokinidea

Posting on behalf of my mother really as she has received her cheque from the KeyData failure. Now she's asking me what to do with it. :mad:

My advise after her telling me that she was regularly putting £100 or so a month into her existing ISA was to top that up with £9k to start with and to put the rest in a high interest rate savings account.

Well she took the cheque to the bank today and was told she couldn't put more than £4K into the ISA this year and in April she should put another £5K.
The rest they've put in some "holding account" as they advised her that it was a bad idea having "that much in your current account"

I thought a years ISA allowance was £10K ?
Why didn't they put the rest in a high interest account

Mikeyorks

nokinidea wrote: »

I thought a years ISA allowance was £10K ?

It's £10.2k.

But - the cash element is restricted to £5100 (£5340 from April). The residue is useable into a Stock and Share ISA ....... be grateful they haven't talked her into one of those? As they would probably have sold her a Guaranteed Equity Bond to go in it.

The 'holding account' may be of higher value? 'High interest accounts' aren't currently very thick on the ground.

nokinidea

Ahh yes, just quizzing her on it now and it does appear to be a "cash ISA" so that tallys that side of things up a bit.

"So have you got any details of this holding account they have put it in then, what interest are they giving you"
I don't know, they didn't give me anything, the woman at the bank said she was going to put it there once the cheque had cleared"

<insert bang head against wall smiley>

20K of her money and she doesn't know what they are doing with it.

Mikeyorks

nokinidea wrote: »

20K of her money and she doesn't know what they are doing with it.

Been there - have several T shirts.

Put up with it with very good grace! Unfortunately they don't remain around for ever.

McKneff

I can send her my bank details if you like, she will know exactly where they are then (or not):rotfl:

nokinidea

Update.
It went into a holding account and after a couple of days 4K went off to top up her cash ISA for the year.
They have said that the rest will stay in this holding account until April where another 5K will go off to her cash ISA again.
or until she decides what to do with it.

They have suggested a bond for the rest as you said.

This holding accounts interest rate is still unknown :mad:

Details of the interest rates of the bonds they are offering are here > //i682.photobucket.com/albums/vv185/ScubaScorpion/Natwest.jpg

You'll have to add the http colon bit yourself because as a noob I can't write links :wall:

soulsaver

Mikeyorks wrote: »

Been there - have several T shirts.

Put up with it with very good grace! Unfortunately they don't remain around for ever.

Wise words...

cos69

nokinidea wrote: »

...... Details of the interest rates of the bonds they are offering are here > //i682.photobucket.com/albums/vv185/ScubaScorpion/Natwest.jpg ....

Those interest rates are low for fixed rate bonds 2.5% for 1 year, can get better instant access accounts

Sainsburys will give you 3.2% (min £5000) according to a comparison site I just looked at. If there is a Sainsburys near you, pop in for some details or check online
http://www.sainsburysbank.co.uk/savings/sav_savings_zone.shtml

What interest is she getting on the ISA, might be worth switching that as well

nokinidea

Another update and it doesn't get much better.
She's finally been in and got the interest rates.

"Reward Reserve" is where they are keeping the main sum.. that's at 0.5%

The most annoying thing is the Cash ISA she topped up, because she always does things in the branch... that's at 0.5% as well

I thought that can't be right for an ISA but sure enough after checking online.. it is.

www. natwest.com/personal/savings/g2/isas.ashx

So anyway, she went across the road into the C&G for their opinions and interest rates (I didn't ask her to) when they checked her details it turns out she already had an old ISA in there, mother didn't even know was there!!!!!!!!!!!!!!!!!!!

So I'm now thinking of pulling her Cash ISA out, along with the funds in C&G and sticking it all along with some from her Reward Reserve account into a managed Stocks and Shares ISA.

Still not sure what to do with the rest of the Reward Reserve account funds though.
Maybe wait til April and do another £10,200 in a S&S ISA ??

Thoughts?

Linton

Only use a S&S ISA if she is sure she isnt going to need the money in the next say 5 years. I would suggest that she keeps a significant amount of money in cash for emergencies.

If you (sorry she) does go for an S&S ISA I would guess that there will be minimal management of the investments. In that case its probably best to go for a broadly managed fund where the fund manager is responsible for ensuring that the investment is divided up amongst a range of different investments.

psychic_teabag

nokinidea wrote: »

So I'm now thinking of pulling her Cash ISA out, along with the funds in C&G and sticking it all along with some from her Reward Reserve account into a managed Stocks and Shares ISA.

Simply withdrawing the money would lose the existing tax-free status, and would appear as new money in the S&S ISA, so it might not all fit within the allowance (since you've already used £5100). Better to do it as a transfer. (You can transfer from a cash ISA to a S&S ISA, but not the other way).

As with cash ISA transfer, you'd need to ask the S&S ISA provider to actually perform the transfer. That way, you can transfer £5100 from this year's cash ISA into the S&S ISA, and add up to £5100 more this year. Anything transferred from an old C&G ISA will not affect this year's allowance.

http://www.moneysavingexpert.com/savings/ISA-guide-savings-without-tax#switch