Getting the best of Cash and S&S rates in one account?

darkvader

Hi,

I had a quick question on managing ISA allowances. Is there any means of investing half my ISA allowance in the best Cash ISA rates available and the other half in S&S, both in a single account?

From what I have read, the best Cash ISA savings rate are from banks while S&S providers/platforms have terrible cash rates. So if I open a Cash ISA with a bank, can I use the same ISA through the bank to invest in funds too? I think I can but not come across it (or perhaps the banks only have a few funds to chose from)

We are in a situation where the OH has maxed her Cash savings and I want put more in through funds but how can we? On the other hand, I have about £6k in S&S with Fidelity and since we want ready cash, I wanted to put some in a Cash ISA but Fidelity (and the other platforms too) offer rubbish rates.

Am I missing something or is this just the way it is? If I open a S&S ISA, put cash in there paying nuts, keep it in there till March and next year, can I move only the Cash part to the best paying bank to get the good rates (without having to close the S&S part of my ISA)?

Thanks
DV

dunstonh

Is there any means of investing half my ISA allowance in the best Cash ISA rates available and the other half in S&S, both in a single account?

Technically possible but doesnt tend to happen and where it has, it tends to a total compromise and a rubbish combination.

From what I have read, the best Cash ISA savings rate are from banks while S&S providers/platforms have terrible cash rates.

Hardly any platforms offer cash ISAs at this time. It is coming on wraps but not many yet.

You have to think of them as two independent product types at this time.

Mikeyorks

darkvader wrote: »

If I open a S&S ISA, put cash in there paying nuts, keep it in there till March and next year, can I move only the Cash part to the best paying bank to get the good rates (without having to close the S&S part of my ISA)?

It's not a viable option. If you keep cash in a S&S ISA then the interest will be - as you say - peanuts. And - whilst it isn't 'taxed' - the interest is subject to a flat rate charge of 20% which is paid to HMRC. In addition the ISA manager will write to you to point out that cash can only be held pending purchase of qualifying investments.

Finally you can only 'move' the cash part to a Cash ISA by withdrawing it - you can't transfer it. So you lose the ISA wrapper at that point.

All in all ..... not worth doing. If you're going to put it in an S&S ISA you really have to buy a qualifying investment with it.

darkvader

Thanks guys,

So I am right in what I assumed - sure seems strange especially when you are not allowed to put the entire allowance in a Cash ISA - there should be an option to invest in S&S and (for those who want ready cash) secure decent rates for Cash deposits.
If not, they should allow us to open one of each - Cash and S&S - in one tax year rather than just the blanket rule of one (whether S&S or Cash ISA) as it really limits allowances to half its value - as is our case

DV

Mikeyorks

darkvader wrote: »

If not, they should allow us to open one of each - Cash and S&S - in one tax year rather than just the blanket rule of one (whether S&S or Cash ISA) as it really limits allowances to half its value - as is our case

I'm afraid you have completely the wrong grasp of it.

You're allowed to contribute to one of each type. You have an allowance of £10680 (each - for 11-12). Of which you can contribute a maximum of £5340 to a Cash ISA and the remainder to an S&S ISA. That 'remainder' can be the whole allowance of £10680 if you wish.

darkvader

Mikeyorks wrote: »

I'm afraid you have completely the wrong grasp of it.

You're allowed to contribute to one of each type. You have an allowance of £10680 (each - for 11-12). Of which you can contribute a maximum of £5340 to a Cash ISA and the remainder to an S&S ISA. That 'remainder' can be the whole allowance of £10680 if you wish.

So, stating an example from my original question, can I have
1. A Cash ISA account with AA paying 3% upto a limit of £5340
2. Another S&S ISA with Fidelity/HL for my funds upto a limit of £5430?

I doubt you can do it this way - From your answer, its true I can contribute to one of each type but both these contributions must be 'within' a single ISA account and as I stated, with the way the products are now, you really cant get the best cash ISA rates and have the option of investing in S&S with a single ISA provider and hence a single ISA account, which is what the law states

DV

talexuser

darkvader wrote: »

can I have
1. A Cash ISA account with AA paying 3% upto a limit of £5340
2. Another S&S ISA with Fidelity/HL for my funds upto a limit of £5430?

That's right.

darkvader

talexuser wrote: »

That's right.

That's great then, I shall open a Natwest Cash ISA this evening

Mikeyorks

darkvader wrote: »

So, stating an example from my original question, can I have
1. A Cash ISA account with AA paying 3% upto a limit of £5340
2. Another S&S ISA with Fidelity/HL for my funds upto a limit of £5430?

Yes. (taking it that the £5430 is a transcription error)

you really cant get the best cash ISA rates and have the option of investing in S&S with a single ISA provider and hence a single ISA account, which is what the law states

No - it doesn't state that. All my Cash ISAs are with Halifax ...... my S&S ISA (single ISA into which I pay my entire annual allowance) is with Hargreaves Lansdowne. I have a previous year S&S ISA with another provider.