Best time to invest in an cash ISA?

dllive

Hi guys,
apologies if this has been asked before....

At the moment we hear that now is a good time to invest in an ISA because all the banks are offering good deals (comparatively speaking!) to entice those who havnt yet paid into their cash ISA. Unfortuantely I have, and is normally the first thing I do each tax year.

Once the 5th April comes, should I max out my cash ISA (after checking the relevant page of MSE for the best rates), or should I wait until the last minute? If I do the latter then it means the cash will be sat earning not much interest for 11 months.

I know theres probably not a deifnitive answer to this question, but Id like to hear your thoughts.
Thanks

westy22

Once the 5th April comes

You have to wait for 6 Apr 12 to deposit 2012/13 funds.

psychic_teabag

dllive wrote: »

Once the 5th April comes, should I max out my cash ISA (after checking the relevant page of MSE for the best rates), or should I wait until the last minute? If I do the latter then it means the cash will be sat earning not much interest for 11 months.

I know theres probably not a deifnitive answer to this question, but Id like to hear your thoughts.

If you already have the money sat in a current account, it would be silly to wait until the end of the year. But it needn't be earning not-much-interest for the year. eg a couple of years ago, Lloyds were paying 4% on current accounts, so it made sense for some people to keep the money there until the last minute, then transfer it. Or if you have an offset mortgage, using it to reduce interest payments might make sense. Or I'm sure there are other possible reasons for deferring it. Oh, yeah, if you're not sure if you might need to use it : better to keep it out of the ISA until you're sure you won't need to withdraw it for a short-term shortfall. If you don't pay tax, but will in the future, you might get a better gross rate for the year, then move it to ISA for long-term tax saving. Lots of possible reasons for deferring.

If you don't already have the money, but will build it up gradually, there's a case for using a regular saver, giving 5% or more (taxable), then transfer it to an ISA when it matures.

fimonkey

I had a similar thought, I already have my ISA with Halifax and the one year anniversary is tomorrow - when the interest is paid. So I then wait until after tomorrow to transfer to a better rate? (Or do I start the process today - all they hype makes me think I am missing out on something).
Thanks

zolablue25

psychic_teabag wrote: »

Or if you have an offset mortgage, using it to reduce interest payments might make sense.

Obviously this would depend on your rate of mortgage interest. We have an offset mortgage that is Base Rate +0.75%, so currently 1.25%. I could keep that money in the bank and save 1.25% or invest as much as I can at Santander in an ISA at 4% (or AA 3.5% if I think I might need to use it). In my case, therefore, there is no sense in using it to offset my mortgage.

psychic_teabag

If it's instant-access, you don't need to wait for the interest to be paid : it will be credited when the account is closed. If it's Halifax reward, I think the 0.2% might be conditional on the account still being open, though.

Transfer forms typically have a "not before" date - intended for transferring fixed-term accounts on maturity, but no reason it couldn't apply here. Then you can bag the interest rate at application time, but still control when the transfer happens. Transfer is unlikely to start immediately anyway.

In fact, waiting until the bonus actually expires means you'll spend a few days earning less interest while the transfer actually takes place.