Savings - too much choice - confusing

The_Goatreich

Hi,
I've finally managed to get into a position where I'm clear of all credit card, loan and overdraft debt after a 5 year slog and now I want to start putting money away for various things. :j

My problem is that there seems to be so many option for saving I'm not sure where to start as there's a few different types of saving I want to do.

Currently I put aside approximately £150 a month into an ISA which goes towards semi-regular, but not monthly expenditure. Things like christmas, birthdays, pet costs, car tax and servicing etc etc. I usually have to draw some money down from this account each month. Therefore I don't think an ISA is the best option. The money withdrawal usually takes 3 working days, which is never a problem. I'd like to choose a better savings account for this money, along with another £200 a month that I'm going to put in towards doing up the house I live in at the moment.

I'd also like to start a long-term saving account, depositing £200 a month towards a deposit for a new house, or if needs be any emergency. I more than likely wouldn't need to touch this money for many years. Presumably this would need a different type of savings account?

With the interest rates changing on accounts seemingly all the time, how often is it recommended that you change from one to another, or generally do people just leave it? My current ISA is with Yorkshire Building Society and is at a gross pa rate of 1.90%.

Thanks in advance for any advice, in the meantime I'll read up all the MSE articles about this.

atush

For money you will keep around a while, stick it in an instant access ISA. You can do better than the rate you rate getting now- I think3%. You could put all your spare cash into this, if you think you are unlikely to be able to out in more than 5300 per year. Once you take money out, you can't out it back. But if you were under the allowance you can add in 'new' money.

For sums saved over time, you can try a regular saver. There is a post on this forum with the best ones at the moment (4-8%).

You should save up until you have 6 months spending in cash, then you can psread out into other investments.

The_Goatreich

Ok, so from what you've said above, and what I've read on this site I'm best to:

Put the £200 a month long term saving into a regular saving, fix in if necessary to get the best rate possible.

Put the £350 a month short term savings into the best cash ISA possible, starting a new one each year, as at that amount I wouldn't reach the £5300 limit.

Excellent stuff, cheers!

atush

As there are only 7 months left in this tax year you could put all of it in an isntant access ISA this tax year. Next April open a new one for the 450 and and a regular saver for the 100 left over.

The_Goatreich

Hmm that could work. I have a spreadsheet set up at the moment dividing my savings into categories, so I could just extend that. Is it worth transferring the money I have into my current ISA too? That's only £260 so wouldn't send me over the limit.

atush

Only save up to your limit, in a Cash ISA. Anything else should be saved in another acct you will pay tax on.

The_Goatreich

OK, I'm a little clearer on this now, thanks again.