Cash ISAs: The Best Currently Available List

badger09

TechieByNature wrote: »

Crunching the numbers suggests that getting the Nationwide 2.0% ISA is the way forwards rather than the '1% for a month, 2% for 2 months, 3% for the rest of the financial year' ramp-up that I would be getting with the Santander account.

Even ignoring the ramp up - £1,000 base and £595 added a month at 2% with no tax for 9 months comes out at £6,414.38. The same at 3% but with 40% tax is £6,408.46.

Thanks for the calculator innovate, it was clearly very helpful Nationwide Easy Saver here I come!

Nationwide FlexDirect current account? 5% on balance up to £2500 for 1 year? You can have up to 4 accounts, though only guaranteed 5% on one (many posters are receiving 5% on multiple accounts) Need funding with £1k pm - but you have to think outside the box as innovate was suggesting

Even after 40% tax, 5% beats those ISA rates, and if you were looking longer term, you could move into an ISA just before the end of the tax year.

TechieByNature

badger09 wrote: »

Nationwide FlexDirect current account? 5% on balance up to £2500 for 1 year? You can have up to 4 accounts, though only guaranteed 5% on one (many posters are receiving 5% on multiple accounts) Need funding with £1k pm - but you have to think outside the box as innovate was suggesting

Even after 40% tax, 5% beats those ISA rates, and if you were looking longer term, you could move into an ISA just before the end of the tax year.

This has confused me now. Looking at the calculator, for the next 9 months at 5% with higher tax I come out about £30 above the 2.0% ISA, but I would need to get 5% on 3 FlexDirect accounts in order for my full allowance to be earning that rate. I'd have to draw on the account balance to move around to trigger the £1k pm on each account, would that negatively affect the interest down to 1% if it took one over £2,500 before immediately leaving again?

innovate, I've just noticed you added text as well as the link. I guess I'm not so certain on the right account now...

This would be so much easier to compare if I already had the money in bulk to move in somewhere.

EDIT: I've been doing my maths wrong. It's 9 months away and I worked out my monthly payment required across 8 months which has made it higher. Guess I need to scrap my calculations and start over.

AndyPK

Having too much balance is not a problem.

Once you have one of them nationwide current accounts you can get a 2.25% Isa with them.

AndyPK

I'm a bit confused on how your in the 40% tax bracket but don't have 1000 to put through an account. It doesn't have to stay in there.
I guess you live in London.

innovate

TechieByNature wrote: »

I'd have to draw on the account balance to move around to trigger the £1k pm on each account, would that negatively affect the interest down to 1% if it took one over £2,500 before immediately leaving again?

No, why should it go to 1%? Take a breather and read up about the FlexDirect http://www.nationwide.co.uk/current_account/flexdirect/default.htm

TechieByNature

innovate wrote: »

No, why should it go to 1%? Take a breather and read up about the FlexDirect

Ok, the breather (and getting some sleep) was good advice. I've now read the page. I was confused by the wording in MSE's best bank accounts page (sorry, can't link) where it says "5% up to £2,500 in yr 1, 1% after". I thought that was referring to the balance rather than the age of the account.

AndyPK wrote: »

Having too much balance is not a problem.

Once you have one of them nationwide current accounts you can get a 2.25% Isa with them.

I now understand that too much balance is not an issue and I'll earn 5% on the first £2,500. But I will earn 0% on anything above, so opening a new account when I get to that point would be required, whether that's another 5% current account (if I can get it) or the ISA. I'm just looking to make the most out of my money to make a decent mortgage deposit on my first place around 2016 or 2017.

AndyPK wrote: »

I'm a bit confused on how your in the 40% tax bracket but don't have 1000 to put through an account. It doesn't have to stay in there.
I guess you live in London.

I live in Manchester but the original idea was to get paid into a new current account with some perks and actually use that different account as my current account. I will have £1,000 to move into any account if I pay my wages into it, or if I use the £1,000 I had currnetly put aside to open my ISA. I was just intending to move ~£530 in each month out of my paycheck as I build up my ISA balance anyway and I'm not always Internet accessible in the days after payday to move everything around ready for bills to go out. I would be trying to use this account purely as an easy-access ISA as I need to force the separation otherwise I let spending get on top of me a little bit.

I only entered the higher tax bracket yesterday after a fairly significant payrise at the end of my first year of employment with the company.

AndyPK

I would be tempted to open the nw Isa once you have the current account.
Don't wait too long as the rates seam to be dropping.
It seams a nice flexible Isa. Stick £1 in now. Then fill it when you have surplus cash.

innovate

TechieByNature, you can get yourself back to a basic rate tax payer if you increase your pension contributions. Obviously, any pension (be it a works pension or a SIPP) means your contributions are locked up until you are at least 55, but it might be worth it financially.*

As to your cash savings: why not try 2 or 3 FlexDirects. Worst case is - provided you check monthly - you'd lose a few quid [in lost interest] if they don't pay you the interest on all of them. You can then still move some of the money to other accounts.

* you do realise you do not pay 40% on everything if you slip into the higher rate tax bracket?

TechieByNature

innovate, yes I was aware of that. But as I'm definitely inside the 40% bracket as my basic salary is over the threshold, all interest I earn will be taxed at it, right?

Sorting out my work pension contributions is one of the many things on the list I need to get on top of over this month.

I've been running through the numbers again, and based on my input (I'm not going for a flat rate across every month any more, going to try get as much in early as possible) the difference works out about £25 in favour of the 5% current account. However, I don't think that's quite worth the effort of having to manage the account balance of the multiple accounts and move batches of £1,000 between accounts manually every month for the next 9 months.

Maybe next year, once I have more savings built up it'll be feasible to DD that type of money amongst multiple accounts automatically but I don't think I'm there just yet.

I appreciate both of your inputs though, and I feel considerably less confused than I was when I first came here so thanks a lot.

innovate

TechieByNature wrote: »

...my basic salary is over the threshold, all interest I earn will be taxed at it, right?

Yes but you don't pay tax at 40% for everything you earn. You have a personal allowance like everyone else has. Once that allowance has been taken off your earnings and other income(*), you start paying tax.

Personal allowance for the current tax year is £9,440. Tax on earning and interest from savings is

0% on anything up to £9,440
20% on the next £32,010
40% on the next £117,989
45% on anything above

(*)Tax on any dividends is slightly different yet again. http://www.hmrc.gov.uk/incometax/basics.htm#6

If your income from employment and savings is £41K this tax year, you pay 20% tax on all of it. If it is £50K, you pay 20% on £32,010 and 40% on £8,550.