Decision time - ISA or Santander 123?

Curlycarly4 · 20 March 2013 at 8:42AM

Hi all,

This is my first post and I'm hoping for some informed advice. Our single storey extension building work begins this week, funded through savings and equity release back in December when our mortgage deal ended. The funds are currently sitting in three places and chunks of the total outlay (approx 30k) will need to be accessed in stages over the next 3 month period.

There's 11k in our Santander 123 account at 3% interest paid monthly. Then myself and hubby have an AA online ISA with around 10k each which was competitive when opened but now the annual interest has been paid, the interest rate has dropped and is now around 1% I think.

So here's my question...should I withdraw the funds from one of the ISAs and move it into our Santander account where the interest rate is much better? How would this affect the tax-free element of the saving and our ISA entitlement? Or am I best to transfer both ISAs to a new more competitive product, even though the funds will be withdrawn and spent within 3 months?

Would really appreciate some advice on how to proceed as ISAs still leave me baffled!

Thanks!

oldfella · 20 March 2013 at 8:58AM

assuming you both pay tax you will be about £50 better off moving the ISA to the 3% Santander current account. No point considering a new ISA for such a short period.