ISA Newbie

LisaB85

I have never had an ISA before; however I have logged onto Barclays and they are offering me a Cash ISA with 3.05% including a 1% 12 month fixed bonus.

I currently have 2 E savers and a basic account in the Esavers I use 1 for saving for bills, the other has savings for Christmas and driving lessons and the basic account is what I use to spend.

How does an ISA work? I have read the basics they have provided me with but I'm still confused.

Do I have to keep money in there for a set period of time before I can access it?

Could I transfer my driving lesson money from the Esavings straight into the ISA to earn higher interest until such time I can afford to learn to drive (I don't have enough to pay for all lessons yet)?

Do I need to pay in regularly? I says I can open with £1 but doesn't mention regular payments.

psychic_teabag

You should start by reading Martin's ISA guides - see the banking/saving button at the top of the page. eg http://www.moneysavingexpert.com/savings/ISA-guide-savings-without-tax

Don't get too hung up about ISA-ness : a cash ISA is just an extra flag on a savings account. Savings accounts come in instant-access, fixed-term, regular-saver flavours ; branch-based, postal, online ; and therefore so do ISAs.

ISAs are just another sort of account available. The fact that you don't pay income tax on the interest usually gives them a big head start when compared against other savings accounts, but that doesn't automatically make them the best account for all purposes. e.h. some regular-saver accounts give a higher net return despite being taxable.

That Barclays account looks like it's instant-access, with bonus for 12 months, so that sounds fairly standard. It's up near the top of those currently available, though you can do better if you already have, say, £2500 already saved. No need to make regular payments. It may be that you have to continue to do something else at Barclays to maintain the rate - it being conditional on some sort of eligibility criteria.

LisaB85

psychic_teabag wrote: »

You should start by reading Martin's ISA guides - see the banking/saving button at the top of the page. eg http://www.moneysavingexpert.com/savings/ISA-guide-savings-without-tax

Don't get too hung up about ISA-ness : a cash ISA is just an extra flag on a savings account. Savings accounts come in instant-access, fixed-term, regular-saver flavours ; branch-based, postal, online ; and therefore so do ISAs.

ISAs are just another sort of account available. The fact that you don't pay income tax on the interest usually gives them a big head start when compared against other savings accounts, but that doesn't automatically make them the best account for all purposes. e.h. some regular-saver accounts give a higher net return despite being taxable.

That Barclays account looks like it's instant-access, with bonus for 12 months, so that sounds fairly standard. It's up near the top of those currently available, though you can do better if you already have, say, £2500 already saved. No need to make regular payments. It may be that you have to continue to do something else at Barclays to maintain the rate - it being conditional on some sort of eligibility criteria.

I have read the info but it is all a bit baffling although as far as I can see it is just a normal savings account so not sure why the word ISA worried me I have £700 to deposit and a percentage of any birthday money and about £10 a month which will be split between driving lessons and Christmas.

I will aim to keep the money in the ISA until next April make the most of the interest rate so will keep the money I save for Christmas in the Esavings, I am currently out of work so I think that makes most sense.

Hope that all makes sense, I have read the info and think I'm going to go for it as it with my current bank so it is all in the same place and if I get a job it allows me to save without being taxed to pay for lessons then a car.

Thank You for your help