Lloyds Vantage Vs cash ISA

titchyone78

I'm new to MSE, and for the first time ever, I have modest savings of £5.500, it is currently sat in a lloyds ISA I think about 2% as its instant access.

My question is would it be better off taking it out and putting it into a Lloyds Advantage account?

psychic_teabag

That depends on your circumstances a bit. 4% from a vantage account is certainly better in the short term. But that is currently only available for a year, whereas the tax-free status of an ISA could give benefits year after year.

I infer that this is "new" money (deposited using this year's ISA allowance). So if you withdrew it from the ISA now, you couldn't replace it. But if you don't expect to be significantly increasing your savings over the next year, it wouldn't be the end of the world to withdraw it now, and then put it back into an ISA next year using next year's allowance.

Gromitt

That depends.

If your on basic rate tax, you'll get 3.2% in a Vantage account.
But if your on 40% tax, then only 2.4%.

It might be better looking for a higher paying ISA account. The post office are offering 3% at the minute. At basic rate tax and your £5500 investment, the ISA is only £10 worse off and has the benefit of being tax free next year too, and then you can add more to it rather than starting again from scratch.

innovate

Also, unless you have a Lloyds current account sitting there ready with 2 Direct Debits, you are cutting it very fine for the 4% offer. There's only one working week now to the deadline.

Also, to get the interest, you need to cycle £1K through the account every month. Though this looks easier because it doesn't have to be all in one go.

I would investigate a transfer to an ISA that pays better interest. They are all dropping their rates quite fast these days, so you need to move fast if you want to move. Alternatively, just sit tight until next March/April, when hopefully we will see some marginally more exciting ISA rates again for a short period.

titchyone78

Thank you for the replies so far, I did say I was new to all this, but I'm getting there:)

I am a basic rate tax payer, and add at least £500 a month to savings, but this is short term, as it is for use in purchasing a house, hopefully in the spring next year.

So it looks like it is best to transfer the ISA to one that pays a little more.

I have maximum in this years ISA now, so not sure where to put next months savings, any advice?

innovate

The savings landscape looks bleak right now....best instant access rate is Natwest with 2.85% at present.

There is the First Direct Regular Saver which pays 8% and you can put in £300/mth BUT you must commit for 12 months, which you may not have?

Have a route round the Savings and Investments Board, may be there's other ideas you get from it.

Gromitt

titchyone78 wrote: »

Thank you for the replies so far, I did say I was new to all this, but I'm getting there:)

To be honest, the vantage account is probably the best your going to get, BUT, you need at least 5K to get the 4%, and 3K to get the 3%. At £500/month, your not going to get the 4% rate, plus the hassle of the DDs and the tight deadline.

So your probably better off with the Natwest 2.85% account for now, and review in 6 months when you got 3K.

and don't forget your ISA for this year is £5640, and you'll be able to renew it next April, so when you've got your next 3K in 6 months, your ISA will be waiting for you