Best savings option

Jesnon

Hello! I've been a regular user of MSE but am new to the forums and have never posted before

I'm looking for a bit of advice on the best savings options available to me at the minute. I'm not sure how much information is needed but basically:

I currently live with my partner and we rent a flat. I'm hoping within the next couple of years (unrealistic!) to be buying rather than renting. I have a low to mid income, though I'm hoping to be moving on to bigger and better things in the long-term. I've spent most of my time since graduating still completely overdrawn (well, at least up to my 0% limit). I've gradually been getting better and have been just under the £1,000 0% limit. It's a little depressing as my salary only covers the overdraft and leaves me a little sum for everything so I end up in my overdraft straight after paying rent and bills etc.

I've never had a credit card before and was interested in starting to build up my credit limit, so I snapped up the opportunity of a 6 month 0% credit card from Nationwide (I've been a loyal customer for a long time now, my main account is with Natwest). It has around £1,000 on it currently that my partner and will have paid off before the 6 month period runs out, and I have no worries about this.

My parents recently took a lump sum on my dad's pension and have decided to give me and my brother a large (to me) sum of money for our futures (and hopefully a deposit for a house in the future). so I now have savings of £5,600 coming in from tomorrow and am trying to work out the best place to put this!

I've looked at some standard ISAs which I guess is the best place to start, but I've also been pointed in the direction of Nationwide's 'Save to Buy' ISA which seems quite good too...

Hopefully I won't need to use any of the savings, and I'm hoping also to add at least another £1,000 into the savings by the end of the year myself, but of course there's never any guarantee...

Does anyone have any good recommendations for my circumstances?

atush

If you have no other savings at the min, you need to put that money into an Instant Access ISA. If you do have at least 500 in cash (not earmarked for that CC repayment) elsewhere, you could put it into a one or more year fixed rate ISA at a larger interest%. But the best deals come out around march time, so maybe an instant access ISA for now should be your best bet.

Once you have cleared your debt, incl overdraft, I would suggest using a regular saver to build up a sum, then at the one year maturity switch it to an ISA.

Dont' be too bogged down with fancy names (such as FT buyers ISA) just pick the ones with the best interest from t he ISA link on the main saving page. And remember, the best deals come out in March/april and dont hang around long so that is when to open a new one, or transfer last years one.

innovate

Just so there is no misunderstanding: you cannot pay into both, an instant access and a fixed rate ISA in the same financial year (unless you have the entire instant access one transferred into a fixed one first).

A complete list of the best available ISAs is in the first post of this thread: https://forums.moneysavingexpert.com/discussion/401374. This is often more comprehensive than the ISA article on the main site.

Nationwide do currently not figure at the top of the ISA interest rates (but were way the best for instant access in April 2012). There are some exceptions, but mostly you don't need to be an existing customer to get your hands on the top rates, and there is no reason why you should not try and go for the best available interest rate.


EDIT: "save to buy" schemes often tie you to the bank's / building society's mortgage. I don't know whether this is the case for the Nationwide one, but if it does, I would stay clear. You would like to be able to shop around for the best mortgage rate as and when you need a mortgage. Committing years in advance might lock you into an unattractive mortgage rate.

badger09

innovate wrote: »

Just so there is no misunderstanding: you cannot pay into both, an instant access and a fixed rate ISA in the same financial year (unless you have the entire instant access one transferred into a fixed one first).

At the risk of muddying the waters and confusing OP - for which I apologise Nationwide is one of the very few ISA providers who do allow you to split your annual ISA subscription over their various cash ISA products. So, if rates were attractive, which they're not at the moment:( you could subscribe say £4000 to a 2 Year Fixed Rate ISA and the balance of £1640 into an instant access ISA.

Given the time of year and absence of attractive rates, I'd go instant access for now and hope for better rates around March.

Jesnon

Thank you very much for your replies :-) it sounds like an instant access isa is the best bet at least until the end of the financial year. I'll have to keep an eye out for any better deals once I'm settled :-)

I think I just remember the good old days where my nationwide isa had a 6% (or some other comparatively ridiculous!) Interest!