ISA v e-savings

pollyanna24

I know I will be getting more interest out of my ISA, but I just wondered if there was an easy way to work out how much.

I could put £1,000 into it today which is just sitting in my e-savings. I like having the e-savings as I can transfer money between accounts online, so if we find we're broke, I usually take it from there! Not a good way to be I know!

The ISA is 5.1% and the e-savings is 4.24% after tax.

david78

Over 1 year, your £1000 would earn £42.40 and the ISA would earn £51 (an extra £8.60).

(The interest is just £1000 times interest rate divided by 100)

pollyanna24

Thanks very much for that. Think I'll start with the ISA from next year and maybe open one in bf's name as well. I suppose it's not that much difference until you start having a lot of money.

Lakeuk

note that if you use it like your e-saving account (like a service account, regularly putting in/withdrawing) then the max you can put in that year will reduce

for example, the isa allowance is £3000

You open the ISA with £1000 (£2000 allowance left)
you're skint so take out £500 (£500 left in account, £2000 allowance left - max you can put in now is £2500)

etc....

irnbru_2

Lakeuk wrote:

You open the ISA with £1000 (£2000 allowance left)
you're skint so take out £500 (£500 left in account, £2000 allowance left - max you can put in now is £2500)

You can only deposit upto £3000.

Lakeuk

irnbru wrote: »

You can only deposit upto £3000.

Best I take from a source to explain my point that if you use a cash isa as a service account then you'll end up restricting the maxiumum balance:-

source http://www.moneysupermarket.com/ISA/GuideToIsas.asp

When the maximum allowance has been invested for one financial year individuals are not able to invest any more even if a withdrawal has been made. For example, A Cash ISA is opened and £2,000 is invested at the start of a financial year, the maximum amount that can be invested over the remainder of the year is £1,000. If a withdrawal of £500 halfway through the year is made, the maximum amount that can be invested is still £1,000 not £1,500. Providing no more withdrawals are made and the remaining maximum investment is made, the balance at the end of the year would be £2,500. The total amount of money invested into a Cash ISA each year is £3,000 regardless of the number of withdrawals made.

david78

Yes, we agree. But there was a mistake in your earlier example lol.

Kilty_2

Thought I'd ask in this thread since it's pretty relevant.

I have approx £3000 sitting in Nationwide's E-Savings. I'd like to apply for a debit card on my FlexAccount when I'm 18 so does having a fair amount in savings affect my ability to do that (I figured it'd show good account conduct etc) or would I be better just transferring it to my NS&I Direct ISA and reap the benefits of a larger, tax free interest rate?