Newbie Isa Question

mattblue

Hi there,

Apologies for sounding thick with this question but ive never had an isa before.....

Ive the full amount to invest...can I put this into an isa now before the new tax year and if so will I get the 3% bonus ?

Thanks

Matt

Mikeyorks

Which ISA are we talking about?

blueberrypie

Do you mean the 3% interest?

Yes, you can - and should - put it into an ISA now. And yes, you will earn interest on it - but you will not earn 3% of what you put in, because it will not have been in the account for a full year. Interest rates are given as *annual* equivalent rates - i.e. what you'd earn if you had the money in the account for a year. So if you had £1000 in an account paying 3%, you'd get £30 in interest. If it was only in there for one-tenth of a year, you'd earn one-tenth of the interest, or £3.

mattblue

Hi there,

@Mikeyorks Sorry I should of explained myself - was on about a 12 month fixed rate isa at 3.10%..

@blueberrypie So if i put my 5300 in an isa now, ill earn 3 months interest @3.10% until the new tax year ?

Thanks again

Matt

pqrdef

If you put £5300 into a 12-month fixed rate ISA now, in 12 months' time you'll get 12 months' interest at the fixed rate.

The end of the tax year only means that you can then put some more money into another ISA. It has nothing to do with payment of interest.

MoneySaverLog

So you could if you have the money put £5,340 into a cash ISA before the 6th April, and put a further £5,640 into another Cash ISA from the 6th April.

You might, if the current fix rate ISA is still available be able to put the lot into the same ISA, just straddling the two payments either side of the tax years.

blueberrypie

mattblue wrote: »

@blueberrypie So if i put my 5300 in an isa now, ill earn 3 months interest @3.10% until the new tax year ?

Yes - but as you're looking at a fixed-rate ISA, you need to leave the money there until the maturity date, so you'll get a full year's interest after it's been there for a year.

On April 6th you can open another ISA (with the same provider or not) and put your 11-12 allowance into that.

Jhzaeth

I've been struggling with a similar question to this. I think I have the right end of the stick here, so could someone just clarify?

I have an E-ISA with Northern Rock. It pays 3.05% Gross Interest, annually. However, and this is the clinch point, The annual payments are made 31/03/2012. By that time I will have been with Northern Rock for 3.5 months. On the 31/03/2012, will I be credited 'annual' interest, but only 7/24 (as 3.5 months) of the true interest? This is as blueberrypie suggested.


If this is true, I want to transfer straight after that date presuming I can find a better rate, as I don't have to have to wait another year.

Thanks in advance!

Lokolo

Jhzaeth wrote: »

I've been struggling with a similar question to this. I think I have the right end of the stick here, so could someone just clarify?

I have an E-ISA with Northern Rock. It pays 3.05% Gross Interest, annually. However, and this is the clinch point, The annual payments are made 31/03/2012. By that time I will have been with Northern Rock for 3.5 months. On the 31/03/2012, will I be credited 'annual' interest, but only 7/24 (as 3.5 months) of the true interest? This is as blueberrypie suggested.


If this is true, I want to transfer straight after that date presuming I can find a better rate, as I don't have to have to wait another year.

Thanks in advance!

You don't need to wait for interest to be paid to earn it when transferring.

You can transfer now and still get 1 months interest (I am assuming you opened mid December?) when you transfer.

Jhzaeth

Ah, but then would I receive the interest on the 31/03/2012?

Lokolo

Jhzaeth wrote: »

Ah, but then would I receive the interest on the 31/03/2012?

No, assuming you transfer all the money, the account will be closed and you will recieve interest straight away.