Need some money

Pastmaster

I will be requiring about £3000 to finish off a home improvement. Should I cash in some of the profits made from my ISAs or go for a 6 months loan at 2.9% PA, and after 5 months pay off the loan?

DeepSporran

pastmaster wrote: »

I will be requiring about £3000 to finish of a home improvement. Should I cash in some of the profits made from my ISAs or go for a 6 months loan at 2.9% PA, and after 5 months pay off the loan?

Do you really mean "2.9% PA" ? If so, then borrow as much as you possibly can, because you can then stick the money in a savings account at 5.7% and make effectively 2.8 % (gross) profit.

Otherwise, compare the ANNUAL %age rate you're paying on the loan with what you expect the rate to be on your ISAs. Unless the rate you'll be paying is quite a bit more than the ISA rate, it's not worth cashing in the ISA, because you won't be able to reinvest in the same ISA at a later date.

This assumes that you are currently making full use of your ISA allowance each year. If you don't then maybe you will not be worried that you will be losing some of the tax-shielding on your savings for ever.

Pastmaster

DeepSporran wrote: »

Do you really mean "2.9% PA" ? If so, then borrow as much as you possibly can, because you can then stick the money in a savings account at 5.7% and make effectively 2.8 % (gross) profit.

Yes. I was cold called by one of my credit card companies last night offering a ,loan at 2.9% for 6 months.

MickMack

Be sure that they weren't quoting you 2.9% per month for 6 months and if so, find out what happens after 6 months if you haven't repaid by then!

Also if you plan to have the balance paid off within 5 months then would it not be a possibility to use one of these 0% balance transfer Credit Cards to do the job

mleonard79

MickMack wrote: »

Also if you plan to have the balance paid off within 5 months then would it not be a possibility to use one of these 0% balance transfer Credit Cards to do the job

You would need to get a SuperBalanceTransfer card like an Egg money card in addition to the BT card to do this but it's definitely a good idea if you just need a few thousand for a small amount of time.

You could, however, apply for a 0% on purchases card and use the card to pay for your home improvements (providing the company you are using accepts credit cards.) This would be a lot less hassle than trying to use is as a Balance Transfer. Have a look at this article for details of the best buys at the moment.

I would tend to avoid cashing in any ISA money if possible as you will lost the tax wrapper around whatever you withdraw forever.

Regards

Michelle