Which ISA do we choose??

mark_steps

Me and the OH are coming into money next month, £3000 to be exact. I know its not alot of money. We would like to put into an ISA (We would not be dipping into the account).

As we are not clued up on this stuff, what options do we have? We are looking to get the best interest rate.

Phoenix79_2

NS&I. Pays 0.55% above BofE rate until April 08. So curretly it pays 5.80% and with expected further rises it will go up.

http://www.nsandi.com/products/disa/index.jsp

mark_steps

I have one with Halifax and that pays 5.25 % per year.
The NS&I looks good. So say we go for that and put in £3000 what do we get back at the end of the year? Are ISAs on a year to year thing only? What do we do with the interest after the year is out? We would like to constantly keep the £3000 in the bank, Looking at say 3 or 4 years. Do we just take the Interest out, would they allow us to do so??

tanith

You can leave the interest in or take it out as you please.. but you can also continue to add to to it by £3000 per year.. So best idea is to leave the interest in there and also add to it the next year.... it soon starts to build up....

mark_steps

Ok so bear with me... Say i have £4000.

I set up a new ISA say in Feb and put in the full amount for the year April 06 - April 07 of £3000.
By March 31st the interest for the year(in my case 2 months nearly) is added. So my amount would increase by say £5. My new balance is £3005 on April 1st 07.

I then transfer a further £1000(balance left from my money i get this month) and since its a new year i am still allowed to transfer a further £2000, thus doing so every year and leaving the money in. Sooner or later if i pay in £3000 every year, in 3 years i could have £9000 PLUS interest??

Wow i thought i could only have £3000 in at any one time.... Cooool!

tanith

AFAIK that is correct.. I am sure someone will come and correct me if I am wrong......

gt94sss2

mark_steps wrote:

Sooner or later if i pay in £3000 every year, in 3 years i could have £9000 PLUS interest??

Yes, thats right.

The only thing is that the tax year starts on the 6 April each year, so you would have to put in your extra £1000 then and not on the 1st April..

Regards
Sunil

david78

mark_steps wrote:

Wow i thought i could only have £3000 in at any one time.... Cooool!

No. You can have as much in an ISA as you like. But you can only deposit £3000 each tax year. Over the years this capital and interest could role up to a tidy sum.

Phoenix79_2

mark_steps wrote:

Ok so bear with me... Say i have £4000.

I set up a new ISA say in Feb and put in the full amount for the year April 06 - April 07 of £3000.
By March 31st the interest for the year(in my case 2 months nearly) is added. So my amount would increase by say £5. My new balance is £3005 on April 1st 07.

You said you already have a Halifax ISA? Is that for this financial year?