£10,000...?

bowlhead99

pleeplop wrote: »

there doesn't seem to be all that much difference between the different options available

That's because there aren't really. The only choices are:
- inside a tax free ISA wrapper or not
there's a maximum you can put in during one tax year and the clock restarts in april. If you don't use one of these and you're a taxpayer, you lose 20%+ of the interest
- locked in for a fixed period of time or not
usually slightly higher rates but stops you getting at it or shopping around for anything better
- with a bank you have used before / heard of or not
handy to use your normal bank; if its a bank you never heard of before then just check the bank is covered by 'FSCS' financial services compensation scheme for if the bank goes bust

The rates are all going to be 0-3%, so in that sense they do all seem about the same, it's the difference between your 10k being 10k(less inflation) after a year, or 10k +3%(less inflation). Not massive. Certainly far less difference in performance than if you were looking at shares investing.

A few 'regular saver' accounts can afford to be higher than this 3% to hook you in but they'll limit the maximum deposit per month and after a fixed period will convert to a normal lower rate. So you won't be earning the tasty headline rate on your cash for the whole year and it might only make you a few pounds better off, just do the maths to see.

I've also been told by some that I should just sit tight and wait until some better interest rates are on offer- is this likely to happen anytime soon?

Sometimes there are good deals during ISA season at the beginning and end of tax years when banks compete for a lot of saver's cash coming into the market. If you wait until then you'll lose a quarter of a year's interest and will have to improve the rate by a third or so to catch up by next Christmas. Don't bother.

Would the benefits of a fixed term arrangement be likely to outweigh the risk of an early withdrawal fee?

Most have charges of 90 days interest or much more (or may not even allow it at all) so if there's a chance you need it don't bother.

You can get accounts which are not fixed annual terms but simply 'notice accounts' where you give them 30 or 60 or 90 days notice. These days on your sort of money you only get a bit more interest for this hassle and they are mostly beaten by the Lloyds Vantage current account.

pleeplop wrote: »

I think I'll look more into ISAs as most seem to agree they are the best option, and also the other advice Robin gave.

Yes,Robin's advice is sound/standard and you would have got it yourself if you'd clicked on the articles in the banking/saving section at the top of this page, which cover maximising your ISA each year and dripfeeding

Whilst I'd love to go the stocks and shares route I'm guessing it's probably not a great idea for someone who barely knows what an ISA is! I'm not really in a position to take risks with the money I have

True especially if you are saving for a fixed event (like to move out).

Re-evaluate it each year as your savings grow. Half of this thread ended up being about investing, as often happens here because people can't help being evangelistic about subjects they're passionate about. The fact they are means there must be some sense in it, and you should bear it in mind each time you think about what you're saving for. Assuming you intend to retire without a salary at some point (even if 50 years away) it will be useful sooner or later.

SliAbhaile

innovate wrote: »

As it happens, I think pleeplob is genuine, but that's no excuse for not doing the groundwork themselves before asking for help.

And no excuse for not posting a simple "thank you" when advice has been proffered.