Lump ISA vs Split ISA?!

jsl20

Hi forum!

Any advice on how to solve my ISA-related dilemma would be greatly appreciated;

I currently have a one year old Santander ISA that has just finished its bonus and pays out 2.5% on my current balance (~£9000). I have another £3500 to put into an ISA. My options seem to be one of the following 2:

1) Transfer everything to Halifax at the 3.0% ISA. Therefore a good rate on all my money
2) Keep the old ISA ticking away, get a new Santander ISA at 3.5% AND get the £100 for transferring a current account. Therefore a good rate on some of the money, but on an account that will track the BoE base rate.

Obviously no one knows how the BoE will change over the next 12 months, but doing some simply calcs it seems option 2 will pay the best if the base rate increases to ~2% during the year. If not, the Halifax option wins.

Anyone got any thoughts or advice?!

Cheers!

Lokolo

Number 2 is a good option. However I have to question as to why you have another £3,500 to put into an ISA?

Your allowance this tax year is £5,100. If you have used some of that already, you have to stick to that same ISA until end of April 5th.

jsl20

cheers!

basically i've used up all my ISA allowance for this tax year. the £3500 is from another savings account that is in need of a decent interest rate.

Lokolo_2

Yes, I would also go with the second option, BUT only open the Santander one next tax year (April 6th) and start making use of your Cash ISA allowance of £5340 for 2011/12

As Lokolo says, you can only contribute that to the same ISA. You CAN transfer your current ISA to Halifax though to take advantage of better rates anyway, this won't count toward the annual ISA allowance.

So, what I would do:

• Transfer Santander ISA to Halifax 3%
• Wait until 6th April, then Open Santander 3.5% ISA (if still available) to use your 2011/12 ISA allowance

jsl20

sorry if i wasn't clear-i've maxed out my ISA for 2010/2011.

I'm now looking at opening a new ISA into which i will contribute in the new tax year-the £3500 is sitting in an account and will be transferred as soon as its April 6th.

so basically my choice is to have all the money at a good rate (Halifax) or split to get most of it on an OK rate and the rest on a good rate which may increase with the BoE rate throughout the year (Santander).

i had a "meeting" with Santander earlier but the lady was pretty useless! she just gave me some paper with interest rates on!

Lokolo_2

Remember you can transfer your existing ISA at any time, so what is stopping you from transfering it to Halifax now, to get a better rate? You do not have to wait until April 6th to transfer. :j

jsl20

yeah i'm aware of that; with Halifax i could transfer now, although with Santander i could open it now, but would have to wait until April to deposit money into it. only problem with Halifax however is the lack of interest tracking, which could hurt my interest towards the end of 2011 if they go up to around 1.5% (compared to tracker options)

Lokolo

jsl20 wrote: »

yeah i'm aware of that; with Halifax i could transfer now, although with Santander i could open it now, but would have to wait until April to deposit money into it. only problem with Halifax however is the lack of interest tracking, which could hurt my interest towards the end of 2011 if they go up to around 1.5% (compared to tracker options)

I would be surprised if they let you do this, they might, but usually you have to fund it within X period.

jsl20

i could put £1 in! i still have £1 left of my allowance to be completely accurate.

Lokolo

jsl20 wrote: »

i could put £1 in! i still have £1 left of my allowance to be completely accurate.

No you can't. You cannot split your allowance, no matter how small.

jsl20

so i can't deposit funds up the the £5100 allowance into more than one ISA during the same tax year?

i know i can transfer but i mean "new" money.