ISA or current account

DanielRichards

Hello,
Could somebody please tell me if its better to have my £1500 in a non taxable ISA paying 4.24% or my current account paying 6.1%? Linked to my current account i have a savings account that i could transfer the money into over a period of months which pays 12% (i'm only allowed to pay in a maximum of £250 per month to this savings account)

If anyone can get their heads round this i'd be grateful.
Thanks
Daniel Richards

gelato_cat

Hiya

Assuming you are a taxpayer, what you need to do is compare the ISA rate with the net rate you are getting from your current account.

By my calculation this is approximately 4.75% (6.1% - 22% tax) so your money is better off in the current account.

HOWEVER, your ISA is paying a very low rate and you could easily get 5% from the likes of the Halifax or National Savings and Investments (minimum opening deposits may apply).

HTH

Suze

DanielRichards wrote:

Hello,
Could somebody please tell me if its better to have my £1500 in a non taxable ISA paying 4.24% or my current account paying 6.1%? Linked to my current account i have a savings account that i could transfer the money into over a period of months which pays 12% (i'm only allowed to pay in a maximum of £250 per month to this savings account)

If anyone can get their heads round this i'd be grateful.
Thanks
Daniel Richards

DanielRichards

Cheers Suzey, i'll be getting a new ISA at the start of the next tax year with NS&I, but till then i think i'll move the money to my current account, as long as they pay the interest!.

gelato_cat

No probs

Why not open the ISA now? Have you already invested £3k in one this year?

From memory, I didn't think you could have the 6.1% A&L premier direct current account with the 12% saver. I thought you could only get the 12% account if you had a premier current account (paying 1.5%). I'd be interested in hearing how you swung this!!!

Suze

DanielRichards wrote:

Cheers Suzey, i'll be getting a new ISA at the start of the next tax year with NS&I, but till then i think i'll move the money to my current account, as long as they pay the interest!.

hot_chick_2

Change to a ISA paying up to 5.2 % interest tax free now, don't waste your money and wait till April to change.

See Martins best buys on this site.:T

Cypher

Remember if you withdraw from an ISA you can't pay it back in but if you transfering its ok, so I would transfer it now to a better paying ISA. In April you get another £3000 allocation so don't waste your 2006/07 one by withdrawing the money.

If you take the £1500 out then thats £1500 you can't put back. Also if you leave it in an transfer it now, you will still have £1500 you can add between now and April, and then you could open a futher ISA in April gaining another £3000 of potential tax free savings

YorkshireBoy

Suzey wrote:

By my calculation this is approximately 4.75% (6.1% - 22% tax)...

Tax on savings interest is only 20%.

I thought you could only get the 12% account if you had a premier current account (paying 1.5%). I'd be interested in hearing how you swung this!!!

Up until around September this year, the regular savings account was linked to the Premier Direct account. The OP should note though, that the regular saver must be set up when you open the current account. It cannot be set up, or the monthly amount modified, at a later date.

gelato_cat

YorkshireBoy wrote:

Tax on savings interest is only 20%.

Just testing It comes out about the same though innit?

YorkshireBoy wrote:

Up until around September this year, the regular savings account was linked to the Premier Direct account.

Was that not the current account which was 5% and the reg saver which was 10% though?

Suze

DanielRichards

Didn't realise i could transfer from ISA to ISA. I'll do that Monday, thanks everyone. I opened my A & L account a couple of months ago, and as far as i can see i have both the 6.1% current account, and the 12% regular savers account. Lucky Man!
Thanks again, i'm off to find the best ISA. Cheers

YorkshireBoy

DanielRichards wrote:

I opened my A & L account a couple of months ago, and as far as i can see i have both the 6.1% current account, and the 12% regular savers account. Lucky Man!

…but did you specify you wanted the regular saver, and stipulate the monthly savings amount, when you opened your account?

If you didn’t, they won’t let you open one now.

gem4

DanielRichards wrote:

I opened my A & L account a couple of months ago, and as far as i can see i have both the 6.1% current account, and the 12% regular savers account. Lucky Man!

Hmmm, are you sure its not the 'plus saver' that they've opened for you, they do that automatically. When I opened my A&L premier direct I had to apply for the regular saver right there and then and choose the amount to deposit regularly too......and it wasnt changeable. However, they set up the plus-saver at the same time. It was a bit confusing.;)