SO CONFUSED about saving...

Kitty_jc

MSE's, please help!!! I'm getting really confused about ISA's and best savings.

Here's how my money works:

I have No debt
I have an ISA with Alliance & Leicester which paid the interest on 31 Dec 2006, and now has just over £2000 in it.
I had a windfall of £3000, so have just applied for a NS&I ISA.

So, my question is, can I still earn interest for 06-07 on my NS&I ISA, seeing as A&L have already paid out? Am I breaking the rules having just applied for a 2nd ISA? Can I leave the £2k with A&L and continue to earn interest?

aaaarrrrrrrrrrrrrrrrrrgggghhhhhhhh, I'm LOST! Please help!

Thanks, Kitty:eek:

Kazza242

kitty_jc wrote:

So, my question is, can I still earn interest for 06-07 on my NS&I ISA, seeing as A&L have already paid out? Am I breaking the rules having just applied for a 2nd ISA?

When did you open your A&L ISA and have you added funds to it during this tax year (between April 6th 2006 to the present)? If not, then you've done nothing wrong in opening a new ISA with NS&I. The fact that A&L have paid interest already doesn't matter, as interest does not count towards your maximum £3,000 cash ISA allowance that you receive each tax year.

If you opened or added to your A&L isa this tax year and then opened and contributed to your NS&I ISA before this tax year ends, then you will have broken Inland Revenue rules. In this case your NS&I isa will be declared 'void' once the Inland Revenue find out about it.

kitty_jc wrote:

Can I leave the £2k with A&L and continue to earn interest?

Yes, you can.

Graham_Devon

Your allowed to open one cash ISA per tax year (5th April - 4th April) I think my dates are correct there.

So the A&L one with 2k in it, if it was opened and 2k deposited after April 2005, you are allowed to put another 1k into it in this financial year.

However, NS&I's is better (I would think) so, someone please correct me if I'm wrong here, you should be able to deposit 1k into your newly opened NS&I ISA for THIS tax year and then after April, deposit another 3k.

You can have as many ISA's open as you like and some will allow you to transfer previous years balances (not the Direct ISA though), but you can only deposit 3k per tax year in total. If you take 1k out of the 3k deposited in any single tax year you cannot top it back up to 3k again in that same tax year. You have used your 3k 'deposit' allowance.

So if you have no other savings, it may be worth opening a decent paying normal savings account so you got an emergency pot of money in there which you can use should you need too. Then top up the ISA as much as you can up to 3k per year.

Hope that makes sense and please remember I'm talking CASH ISA's only here, of which your also talking about.

Mikeyorks

Graham_Devon wrote:

Your allowed to open one cash ISA per tax year (5th April - 4th April) I think my dates are correct there.

Hopefully it's a bit academic - but it's actually 6th Apr - 5th Apr.

Graham_Devon wrote:

So the A&L one with 2k in it, if it was opened and 2k deposited after April 2005, you are allowed to put another 1k into it in this financial year.

Confused with that - presumably you mean 'April 2006'? If you mean April 2005 (but before Apr 2006) - then any sum up to £3k can be added?

Graham_Devon wrote:

However, NS&I's is better (I would think) so, someone please correct me if I'm wrong here, you should be able to deposit 1k into your newly opened NS&I ISA for THIS tax year and then after April, deposit another 3k.

...... and getting more confused by the minute. You can't contribute to cash ISAs with different providers .... in the same tax year ... even if you stay within the £3k of new money.

Kitty_jc

The issue isn't with 'opening' accounts .... it's with 'funding' them. And it needs to be remembered that transferring funds into an ISA is not regarded as 'funding' in respect of the annual allowance. But equally has to be remembered - you can't transfer into the NS&I ISA.

Post #2 is accurate, and you should work with that. If you have put money into the A&L ISA after 6th Apr 2006 (ignore the Interest added) - and you've only 'applied' for the NS&I ISA - but not funded it .... then don't go ahead. But if no funds into A&L after 6/4/06 - then go ahead with the NS&I one. And (after Apr 07) you can add up to a further £3k to either of the ISAs - but can't add to both - even if the sum overall is £3k or less. Or you could open one with another provider in 07-08 - and confuse yourself further;)

Kitty_jc

When did you open your A&L ISA and have you added funds to it during this tax year (between April 6th 2006 to the present)?

I opened it in April 06 with £500 ahead of the deadline, but didn't get any interest on it as they pay out on 31 December. I added £50 to it, which the interest is paid on. The other £1450 was added early Jan.

My application for NS&I hasn't been accepted yet - should I write to cancel?

Thanks for advice so far!

Mikeyorks

Kitty_jc wrote:

My application for NS&I hasn't been accepted yet - should I write to cancel?

No - I'd 'phone them and explain you've mistakenly (is there a cheque with it?) applied for a cash ISA already having funded one in this year. If you're convinced NS&I will still be the right one after April 07 - they may agree just to open it without funds, so you can add money after April? On the other hand - possibly cleaner just to pull out completely and then re-visit it in April. But I'd still 'phone.

Your choice then as to whether you add £1k to your existing ISA now?

Kitty_jc

All done online with my debit card...so I've emailed initially for details of how to cancel, as I think that's best.

I am concious though tha A&L are short changing me, as I've deposited over £1k in the ISA since Dec 31st, and well before the April cut off, but they've already paid out, so I'm missing out aren't I?

Ian_W

Kitty_jc wrote:

I am concious though tha A&L are short changing me, as I've deposited over £1k in the ISA since Dec 31st, and well before the April cut off, but they've already paid out, so I'm missing out aren't I?

No, they're not. They work out interest daily but only add it to the account once a year. The money you paid in will be earning interest and if you closed the account [you shouldn't unless you really need to - as you'll lose the years tax free savings allowance] or transferred it to another ISA provider they'd pay the interest they owe up to when the money leaves them.