Total ISA Novice - please help

movinghelp

Hello, I am a complete ISA novice. I have some savings (about 10k) and would like to put this in a savings account. I've been advised to put the full amount allowed - £5,640 before April and then do the rest after April.

I have had a look at this http://www.moneysavingexpert.com/savings/best-cash-isa but I just feel a bit confused. I do think I need easy access as I may need the cash for a house deposit either Oct time this year or the same time next year.

Are there any other alternatives? I'm really want something low-risk.

xylophone

You need access to the money within a short period so there is really no option but to put the money in a deposit account or current account of one kind or another. The advantage of the cash isa is that the interest is tax free.

The Coventry 60 day notice might suit http://www.coventrybuildingsociety.co.uk/

There are easy access cash isas - see http://www.thisismoney.co.uk/money/saving/article-1583864/Best-savings-rates-Isas-Cash-Isa-accounts-fixed-rate-Isas.html

The tables will also give you details of non- isa accounts.

movinghelp

Thanks for this, is this the Coventry deal you refer to: http://www.coventrybuildingsociety.co.uk/savings-and-investments/productfeatures.aspx?prodCode=60NI2

3.10% is higher than any of the rates in the tables but I'm guessing this is because you have to give 60 days notice. That's not really a problem for me so sounds attractive.

Bit confused about the difference between accounts with/WITHOUT bonus, sounds less risky to go for those without a bonus as I will want to make another deposit after April.

Again, thanks for taking the time to look these out, it's very helpful.

Robin_TBW

There are loads of instant access ISAs just find the one with the best rate and terms/conditions that fit. Then you've got the first couple of sentences correct when you say put £5,640 in now and £5,760 in after April 6th. Sorted.

bugbyte_2

Hi, I believe the Cov one is guaranteed until Nov, so should be good up till then. What you could consider doing with any notice account like the cov is give notice in the time frame you may need the money. If you need it in Oct, request it in Aug for a 60 day'er. If it transpires you don't need it, just leave the money in there.

movinghelp

Thanks for this, I've just thought though it's not really worth it unless I leave it for a year to accrue the interest. So if I deposit today I would need to leave it till Jan 2014 before it would have accrued the 3.10% is that right? And if I do the full £5,760 in after April 6th would I then need to leave it until April 2014??

Sorry if this is a stupid question.

movinghelp

A friend has said it would be a good idea to do the first deposit of £5,640 the day before you can make the full second deposit of £5,760 (after April 6th) because the interest is paid annually when you open the account.

Otherwise if I put 5640 in now I would get the interest for the full year paid today for it but for the 5750 you put in april I would only get 9 months as the money paid in 3 months after the account started.

Does this make sense?

droopsnoot

If you put the £5640 in now, it will start earning interest now and will have earned it's first years interest in 12 months. The £5760 will start from when you put it in, by the time it's earned 12 months interest the first deposit will be a quarter of the way towards its second year. The sooner you deposit, the sooner you start earning the interest. If you end up not withdrawing, you'll be better off.

Assuming the deal hasn't changed by April, that is.

droopsnoot

The interest is calculated daily, but paid annually. I read that as saying that if you withdraw all of it in April 2014, you'll have earned 15 months on the £5640, and 12 months on the £5760. The first 12 months of each will be in the account because it's been paid annually, but the three months extra interest on the first payment won't hit the nominated account until April 2015.

Just because interest is only paid annually doesn't mean you can only use the account in "blocks" of 12 months. It still earns the interest, you just don't receive it until the 12 month period is up.

movinghelp

Ok so I'm better depositing now. If I remove all the money in April 2014 will the account be allowed to be kept empty until April 2015 when they will then the extra interest on the first payment (3 months)?

Also I've filled in the application but weirdly its saying Tax status: Non tax payer??

Vortigern

movinghelp wrote: »

Ok so I'm better depositing now. If I remove all the money in April 2014 will the account be allowed to be kept empty until April 2015 when they will then the extra interest on the first payment (3 months)?

A very common misconception on savings accounts, including ISAs is that you have to keep them open for 12 months to get the interest. It's not true! In most cases you'll get all the interest you've earned as soon as you close the account. The only effect of keeping the account empty till 12 months is up is to delay the payment of interest.

Inevitably there are exceptions. Some accounts pay a bonus which is conditional on keeping the account open, and there's usually a penalty for early closure of a fixed term account.