ISA v Savings I dont know what I should do?

gorbyuk

I started and cash ISA in March with HSBC its a fixed rate currently earing 2.4% it's at the 11/12 limit of £5340 I also have an esaver (5) with Santander earing 3.2% (2.56% net)

Should I close the ISA and put it all in the esaver as it would earn more even though I'd have to pay tax on it?

I already have £4822 earning nearly as much interest in the esaver account

anyone have any suggestions?

notbritishgas

I personally would leave it in the ISA, if you move it to the Santander account you would only make £8.50 extra in a whole year, and bear in mind that account has a large bonus which expires after a year, reducing the interest to I think 0.5%.

Also once you lose the tax free status you can never get it back for that year.
The rate of 2.4% seems quite poor for a fixed term, when it expires I am sure you could find a better one.

Edit: just checked and you may be better moving your esaver balance into the Santander Instant access ISA paying 3.3%, once again though with a large bonus for one year. (assuming you have not used this years allowance)

innovate

Any taxpayer would be foolish to give up the ISA protection for their savings and move the money into a savings account with chargeable interest. For best cash ISAs check here. Non-ISA savings accounts don't pay as much net interest as ISAs do - - with the possible exception of Regular Savings accounts. But these are limited to a lot less per year than ISAs, and are often used to save lumpsums for ISAs.

Edit: consider transferring (do not move it yourself!) your HSBC ISA to a better rate ISA as soon as it has matured. 2.4% is a terrible rate for a fixed-term ISA.

bigfreddiel

get 4+% in a frisa or keep a look out for a higher rate instant isa - you couldhave had 3.5% a few weeks ago.

don't forget the other benefit of isas - you don't need to declare them on your tax return, no records to keep. even if you don't need to enter a tax return now you may in the future,so keep your isa and TRANSFER to a better rate each year.

fj