isa or high interest account

souki234

Hi all, want to pick your brains. Easy question- which account is best to open with an initial £1500 then saving £250 each month.
Is it either a mini ISA account paying approx 6% or Lloyds high interest account paying 8% gross.

tom188

tax status?

Snow_Dog

If you're a basic rate taxpayer then the difference between 6% tax free and 8% taxed at 20% is not a lot (with the Lloyds account you would be acheiving 0.4% more over the year.

However you cannot invest an initial £1500 in Lloyds regular saver, its a maximum of £500 initial investment.

The other complication is that once you have missed the current years ISA allowance you cannot get it back.

Personally I would look at something like the Barclays ISA offering 6.5%, deposit the £1500 and then monthly £250 for 6 months, till you've reached the £3K annual allowance for 2007-2008.

By then it will be November and you are likely to have some even better interest rates to choose from since the BOE have just upped the IR base by 25 points and are likely to raise again before November.



If you dont pay tax then simply go for the highest paying account.

If you are a higher rate taxpayer then ISA.